Energy regulator Ofgem has today (Friday 22 November) announced a 1.2% increase of the energy price cap for the period covering January-March 2025.
The change to the price cap – which sets a maximum rate per unit and standing charge that can be billed to customers for their energy use – will rise by £21 for an average household per year or around £1.75 a month.
For an average household paying by Direct Debit for dual fuel this equates to £1,738 per year. This is 10% (£190) cheaper compared to January-March 2024 (£1,928) and 57.2% (£2,321) less than the energy crisis (January-March 2023).
It comes as analysis by Ofgem shows around 1.5million households switched tariff over the past three months. The regulator is urging customers to take advantage of the rising choice in the market and look for the best deal to help keep their household bills down. By switching, savings of up to £140 are currently available.
Following a call by Ofgem in August for suppliers to offer more choice with low and no-standing charge tariffs, there has been an increase in the number of suppliers offering these kinds of deals. There are currently 8 available that are at least 10% below the level set in the price cap.
However, while these come with a lower standing charge, they do have a higher unit rate. They could benefit customers with lower energy usage but will not work for everyone so consumers should carefully consider what works for them.
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.
“Our reliance on volatile international markets – which are affected by factors such as events in Russia and the Middle East – means the cost of energy will continue to fluctuate. So it’s more important than ever to stay focused on building a renewable, home-grown energy system to bring costs down and give households stability.
“In the short term though, anyone struggling with bills should speak to their supplier to make sure they’re getting the help they need and look around to make sure they’re on the best, most affordable deal for them.”
The regulator is encouraging customers to consider the way they pay their bills. Around 5 million customers pay by standard credit payments – which means paying for energy after it has been used. But this is much more expensive, particularly over the winter months.
Customers could save £100 by simply switching from standard credit payments to Direct Debit payments or smart PPM, which remains the cheapest way to pay for energy.
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.
There are other cheaper fixed deals on the market which don’t require additional services that could save customers more than £140 per year compared to the upcoming cap level.
If consumers are worried about paying their bills, they can contact their supplier for support. Ofgem’s rules mean they must work with their customers to agree an affordable payment plan. They may also be able to help by offering more time to pay, access to hardship funds and advice on how to use less energy.
Age Scotland’s Policy Director, Adam Stachura, said: “This latest increase to the energy price cap is yet another blow for older people facing the coldest months without the safety net of the Winter Fuel Payment.
“At a time when many are already feeling under pressure, news that bills are set to rise further still will put those already struggling in an extremely difficult position. They will be very disappointed that there is no end in sight, and no support measures identified for those not claiming or not eligible for Pension Credit.
“Pensioners in Scotland are the most starkly affected by fuel poverty, so government must deliver much more to support them or the numbers in this grim position will spiral further. This another compelling reason for the Scottish Government to bring back the universal entitlement to the Winter Age Pension Heating Payment next winter.
“With Scotland already recording the coldest temperatures in the UK, we are seriously concerned about older people’s health being jeopardised if they are unable to heat their homes.”
Consumer Scotland Head of Energy Kate Morrison said: “Although lower than at the peak of the energy crisis, energy bills are still historically high and will rise further in January.
“One of the legacies of the past two years of high bills has been a growth of energy debt and arrears in the GB domestic market which now exceeds £3.6bn – a record high – and bill increases will impact further on levels of debt
“This will be a challenging winter for consumers, particularly those with higher energy needs including disabled people and those with health conditions.
“There is a need for governments to design and deliver better targeted energy affordability support for consumers, particularly given current levels of debt and ongoing pressure on household budgets.”
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