Ofgem confirms price cap will rise in Jan

Brace yourselves for another increase in your household energy bills come January 1, 2025.

Ofgem has confirmed a 1.2% rise to its price cap, meaning the typical annual bill for households in Wales, Scotland, and England will jump from £1,717 to £1,738, an additional cost of around £1.75 per month. This follows a 10% increase in October of this year.

In response to the announcement, Tim Jarvis, director general of markets at Ofgem, acknowledged the ongoing challenge posed by energy costs for many households. Jarvis encouraged consumers to explore various energy tariffs to potentially lower their bills, emphasizing the importance of shopping around to find the most affordable options.

He added, "Our reliance on volatile international markets means the cost of energy will continue to fluctuate. It's crucial to focus on developing a renewable, home-grown energy system to enhance cost-effectiveness and provide stability for households."

The rising energy prices coincide with a recent decision by the Government to eliminate winter fuel payments for pensioners not receiving pension credit or other benefits, affecting approximately 10 million pensioners across the country. Caroline Abrahams, charity director at Age UK, expressed concern, noting the challenges faced by older individuals living on limited incomes.

Abrahams emphasized, "Older people, especially those excluded from winter fuel payments, are in a difficult position amidst increasing energy prices. The rise in the energy price cap adds to the financial strain for this vulnerable group."

Alex Belsham-Harris, head of energy policy at Citizens Advice, highlighted the continued financial struggles faced by individuals trying to meet their energy bills. Belsham-Harris stressed the need for targeted support to assist those most affected by the escalating costs of energy.

National Energy Action chief executive Adam Scorer echoed the sentiment, emphasizing the urgency of providing government aid to prevent vulnerable households from falling further into debt due to rising energy expenses.

Ofgem adjusts the price cap every three months based on wholesale energy costs. The energy price cap was introduced by the government in 2019 to set a maximum price for energy suppliers, aimed at protecting consumers in England, Scotland, and Wales from overcharging.

Ofgem is currently reviewing the future of price protection measures, including the viability of the price cap and a potential ban on acquisition tariffs designed to attract new customers with discounted rates.