UK households will get five payments worth £2,490 to help with energy price cap rise

Energy bills are set to rise by an average of £1.75 a month from January, as Ofgem announces the new energy price cap. The regulator changes the price cap every three months, with the latest one set to take effect on January 1 and continue through to March 31.

That cap will be set at an average of £1,738 annually for a typical dual-fuel household paying by direct debit. This represents an average increase of 1.2% per household or £21 per year. Despite the increase though, bills are expected to be around 10.0% cheaper than they were at the same time last year.

The impact of these changes will vary from household to household though, depending on how much fuel you use. Standing charges are falling by 1p for gas and 2p for electricity. The unit price for gas, however, is rising by 10p per kilowatt hour (KwH), which is a rise of 1.6%. The unit price for electricity is rising by 36p per KwH, a rise of 1.5%.

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But British Gas, OVO, EDF, EON and Octopus customers are being handed five payments to help them meet their bills...

Emergency credit - £15

If you're a prepayment energy customer and you're going to run out of power, you should be able to access "emergency credit" from your supplier. You'll typically be given between £5 and £10 but some energy firms offer more than this - for example, Utilita gives customers up to £15.

Emergency credit is normally available when you have less than 50p for electricity or less than £2 for gas. Alastair Douglas, TotallyMoney CEO calls for price cap overhaul, energy VAT cut, greater support for the vulnerable, and an end to the Big Six’s 92% market domination.

He said: "A warm home shouldn’t be considered a luxury, but it’s fast becoming that. Just as we’ve had the first cold snap of winter, we hear that energy bills will increase again in January, to £1,738 per year, and the forecast says that higher costs are here to stay.

“And although the government has announced its new support scheme with the energy providers, there’s still no sign of a real long-term plan to support people with their bills. Which, if Ofgem is to stand by the claim that it's working ‘to protect energy consumers’, it really needs to do."

Energy grants - £2,000

The British Gas Energy Trust offers help worth up to £2,000 and this can be accessed by any prepayment meter household - not just its customers - providing you meet the eligibility criteria. Other firms that currently have active schemes include EDF, Octopus Energy and Scottish Power. You normally need to be behind on energy payments, and you may need to ask for help first through a free money help service such as Citizens Advice. Some schemes ask you to provide evidence of your income and any benefits you receive.

Warm Home Discount - £150

You can get £150 off your electricity bill - normally credited directly to your energy account, or as a prepayment voucher - through the Warm Home Discount scheme. If you're eligible, the discount should be applied by the end of March 2025.

Mr Douglas said: "That’s because the energy price cap is still in place, and simply put, it’s no longer fit to do the job it set out to do. And as a result, six million homes are in fuel poverty. Some may be eligible for support, but many more will struggle to stay warm and keep the lights on this winter.

“The government and the regulator need to take a fresh and collaborative approach to make sure that nobody’s left out in the cold. Whether that means scrapping the 5% VAT rate on residential energy, so everybody can benefit, or introducing a future-proof solution for the most vulnerable, something needs to be done.

“Part of this will mean addressing the lack of competition in the market. Today, there’s only 21 active suppliers, compared to 52 prior to the energy crisis, and six of these providers dominate 92% of market share, locking in rates at, or just below the price cap. And if a customer wants to move between suppliers before the end of their contract, they will often face exit fees of up to £300.

“If you’re struggling to keep up with your bills, then get in touch with your supplier to see if they can provide you with extra help. Each one has a support hub, and you might be eligible for a grant, a payment holiday, or an upgrade to improve your energy efficiency.”

Cold Weather Payments - £25

Cold Weather Payments are issued when the average temperature is recorded as, or forecast to be, 0C or below over seven consecutive days. Each payment is worth £25, although it is possible to get multiple payments if you go through several spells of freezing weather.

Ranald Mitchell, Director at Norwich-based Charwin Mortgages commented: "Even a small rise like this is another turn of the screw for households already grappling with high costs. It’s a stark reminder that energy affordability remains a critical issue, and we need urgent progress on long-term solutions like renewable energy to shield families from this relentless financial strain. The pressure on people's finances is growing all the time."

Ben Perks, Managing Director at Orchard Financial Advisers commented: "The battle between households and their bills rages on. Disposable income is fast becoming a thing of the past. Families are cash strapped and another uncontrollable increase will leave many with their head in their hands wondering, “when are we going to catch a break?" Something needs to change and urgent action is needed from this Government to get control of the economy and put more money in people’s pockets."

Winter Fuel Payment - £300

The Winter Fuel Payment is worth up to £300 and is awarded to pensioner households who claim certain benefits. To get the Winter Fuel Payment this year if you live in England or Wales, you must have been born before September 23, 1958, and claiming one of the following benefits between September 16 and September 22, 2024:

• Income Support
• Income-based Jobseeker's Allowance
• Income-related Employment and Support Allowance
• Pension Credit
• Universal Credit

Commenting on Ofgem’s price cap announcement, Friends of the Earth campaigner, Sana Yusuf, said: “Yet another increase in energy prices shows just how vulnerable we remain to the volatility of global gas pricing. We need a decent plan for upgrading our heat-leaking homes, which are largely the reason energy bills remain high and why too many people are freezing in cold, damp conditions again as we move into the colder months. It’s good to see the government will lean more heavily on profiting energy suppliers to support struggling customers through the next period, but if we’re to end the cycle of difficult winters for millions then we need more than short term measures.

“The rise in inflation this week, driven primarily by climbing energy prices, shows why upgrading our homes goes beyond lifting people out hardship and protecting the planet – it makes economic sense too, as it will leave people with more of their hard-earned cash to spend. That’s why in its forthcoming Warm Homes Plan, the government must go much further and faster, by committing to spend £6bn a year on a national insulation programme, targeted in the areas most in need first. It’s only with this level of investment that we can end the scourge of cold homes for good.”