BILL BLOW
Energy bills to rise for millions this winter as price cap hiked to £1,738 a year
Keep scrolling to see how much you will be charged
ENERGY bills will rise for millions of households at the start of next year.
The energy regulator Ofgem has confirmed the new price cap, which comes into effect on January 1, 2025.
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The average dual fuel bill for those not on a fixed deal will rise from its current rate of £1,717 a year to £1738
The price of electricity will rise from 24.50p per kWh to 24.86p, Ofgem said.
Standing charges, which cover things like maintaining the network and operational costs, will be 31.65p down slightly from 31.66p a day for gas and from 60.99p to 60.97 for electricity.
The energy regulator said the price a supplier can charge for gas will rise from 6.24p per kWh today, to 6.34p from January 1.
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But bear in mind the exact amount you pay can be higher or lower depending on your usage and how you pay, plus the cap is reviewed every three months.
WHAT DOES THIS MEAN FOR YOUR BILL
THE SUN'S Head of Consumer, Tara Evans, explains what this means fro your energy bill:
THIS is another blow to households as they will see another £21 a year added to their bills from January.
However, there are plenty of fixed deals around that beat the price cap at the moment.
It's worth comparing prices and considering fixing as it will help you save money.
Around 29million households are on standard variable tariffs which are affected by the price cap, according to Ofgem.
Experts at Cornwall Insight had , after previously believing that it would fall slightly.
Despite the rise, average bills remain considerably lower than during the peak of the energy crisis, which was fuelled by Russia's invasion of Ukraine in February 2022.
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The war caused a spike in an already turbulent wholesale energy market, driving up costs for suppliers and customers.
Before the energy price shock, a standard annual bill was £1,084.
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Tim Jarvis, director general of markets at Ofgem, said: “While today’s change means the cap has remained relatively stable, we understand that the cost of energy remains a challenge for too many households.
"However, with more tariffs coming into the market, there are ways for customers to bring their bill down so please shop around and look at all the options."
It's important to note though that the price cap is not a limit on the overall amount people will pay for their energy.
Instead, it caps the amount that they pay per kilowatt hour, or unit, for gas and electricity.
The figure is calculated based on what Ofgem thinks an average household will use.
This is calculated assuming that a typical household uses 2,900 kWh of electricity and 12,000 kWh of gas across a 12-month period.
Those who use less will pay less, and those who use more will pay more.
Upcoming price cap dates
The energy price cap is updated every three months by the energy regulator, Ofgem: January, April, July, and October. The upcoming dates for 2025 are below
- 25 February 2025 – period April 1 2025 to June 20 2025
- 26 May 2025 – period 1 July 2025 to 30 September 2025
Be aware that the exact unit rates and standing charges you pay will vary slightly based on your supplier, where you live and how you pay for your gas and electricity costs.
The energy price cap is adjusted every three months to reflect changes in underlying costs.
The price cap for April 1 to June 30 2025, will be published on February 2025.
If you're on a fixed tariff there will be no change to your bill, as you've locked in the price for a set period.
Ofgem is also currently considering the future of price protection, including the suitability of the price cap and a potential permanent ban on acquisition-only energy tariffs, or (BAT).
The BAT, was introduced in April 2022 to eliminate the often risky short-term discounted tariffs designed to entice customers to switch suppliers.
Millions of pensioners are also facing a winter with less support, after the new Government decided to scrap winter fuel payments for those who do not receive pension credit or other benefits.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said:"The decision to introduce a price cap change in the middle of winter was taken by Ofgem in 2022 and was described as an inhumane policy at the time."
“Already the average household will have paid around £2,500 extra for their energy than had we not been so exposed to volatile energy markets."
What can you do now?
The price cap dictates the price of standard tariffs, so the standard tariff will rise on January 1.
The main alternative tariffs being offered are fixes where you lock in - the price is not affected by the price cap.
Fixed deal offers move up and down based on the current supply that energy firms can get based on the current wholesale rates.
Nous.co has created a calculator which tells you how much you pay now under the most recent price cap.
If you've been left worried about energy bills next January, it might be worth fixing an energy deal now.
Fixed deals see you charged the same gas and electricity rates throughout the contract term.
But there are still a range of deals available.
As always, make sure to do some research and use a comparison tool such as MSE or USwitch.
Something to bear in mind though is that most comparison sites just give you the current price cap, while you need to look at the price cap over the next year to get the best view.
Of course, you should only switch to the cheapest fixes though, not all of them are bargains and some of them have hefty exit fees.
Currenlty, the cheapest deal on the market could save a typical dual fuel customer £210 compared to the upcoming price cap level.
However, this requires signing up for an additional boiler cover service.
If you don’t want to commit to a fixed tariff it's always worth considering a variable tariff.
These track wholesale gas and electricity costs, meaning your unit rates and standing charges can go up and down.
Ofgem is encouraging households to take advantage of the market and said by switching customers could make savings of £140.
Back in August, the regulator made calls for suppliers to offer more choices for low and no-standing charge tariffs, leading to a spike in these types of deals.
There are currently eight of these types of deals available that are at least 10% below the level set in the price cap.
But it is worth noting that while these come with a lower standing charge, they do have a higher unit rate.
So, it could work for customers with lower energy usage but would not work for everyone.
The regulator also said that households should consider alternative ways to pay their energy bills.
Paying by standard credit payments - which means paying for energy after it has been used - is much more expensive during winter.
The regulator said that customers could £100 by direct debit payments or smart pre-payment meter which remains the cheapest way to pay for energy.
A smart prepayment meter is a type of smart meter that allows customers to pay for their energy before they use it.
How to get help with your energy bills
If you are worried about paying your energy bills this winter it is worth being aware of a number of support measures which are available.
For starters, the government has begun rolling out its Cold Weather Payment, which gives people £25 for every seven day period of cold weather.
Many gas and energy suppliers offer grants and schemes for customers who are struggling.
For example, British Gas has a fund open to pre-payment meter and credit customers who have found themselves in debt worth up to £1,700.
The Individual and Families Fund was first set up in 2021 to help households struggling with energy debt.
This scheme's support is available to British Gas and non-British Gas customers.
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You might be able to get help with essential costs from your local council through a programme called the Household Support Fund (HSF).
The funding is designed to help people who are vulnerable or can’t afford to pay for necessities like energy bills, water bills, and food.
What energy bill help is available?
There's a number of different ways to get help paying your energy bills if you're struggling to get by.
If you fall into debt, you can always approach your supplier to see if they can put you on a repayment plan before putting you on a prepayment meter.
This involves paying off what you owe in instalments over a set period.
If your supplier offers you a repayment plan you don't think you can afford, speak to them again to see if you can negotiate a better deal.
Several energy firms have schemes available to customers struggling to cover their bills.
But eligibility criteria vary depending on the supplier and the amount you can get depends on your financial circumstances.
For example, British Gas or Scottish Gas customers struggling to pay their energy bills can get grants worth up to £2,000.
British Gas also offers help via its British Gas Energy Trust and Individuals Family Fund.
You don't need to be a British Gas customer to apply for the second fund.
EDF, E.ON, Octopus Energy and Scottish Power all offer grants to struggling customers too.
Thousands of vulnerable households are missing out on extra help and protections by not signing up to the Priority Services Register (PSR).
The service helps support vulnerable households, such as those who are elderly or ill.
Some of the perks include being given advance warning of blackouts, free gas safety checks and extra support if you're struggling.
Get in touch with your energy firm to see if you can apply.
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