UK energy bills to rise in January as Ofgem announces new price cap

Energy regulator Ofgem has today (November 22) 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).

Ofgem says the cap increase comes as 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 energy bills down.

READ MORE:DWP Cold Weather Payment postcode checker - find out if you are owed £25

By switching, savings of up to £140 are currently available, Ofgem advises. Adding there are currently eight deals 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.

The energy regulator said this could benefit customers with lower energy usage but will not work for everyone so consumers should carefully consider what works for them.

Join our WhatsApp Top Stories and, Breaking News group by clicking this link

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."

Mr Jarvis said volatile international markets – such as events in Russia and the Middle East – means prices will continue to fluctuate, advising it was "more important than ever" to build a renewable, home-grown energy system to keep costs down.

Adding: "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 five million customers pay by standard credit payments – which means paying for energy after it has been used.

Ofgem said paying this way is much more expensive, particularly over the winter months, advising 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.

Trouble paying your energy bill?

Ofgem said if consumers are concerned about their ability to pay their bills, they should reach out to their supplier for assistance. According to Ofgem's regulations, suppliers must collaborate with their customers to come up with a manageable payment plan.

The regulator said this can also include additional support such as extended payment periods, access to hardship funds, and advice on energy conservation.