Energy price cap will rise by 0.2% from January

Millions of households will see their electricity and gas bills go up in the new year.

Energy regulator Ofgem has confirmed that its latest price cap will go up by 0.2% in January.

While the increase is small, it’s unexpected, as forecasters had tipped the cap to fall at the start of the year.

What is the energy price cap?

The energy price cap limits how much suppliers can charge per unit of gas and electricity. 

But it doesn’t cap your total bill - the amount you pay depends on how much energy you use.

The price cap applies to households on standard variable tariffs, which are the default tariffs for customers who haven’t switched to a fixed-rate deal. 

What will the increase cost you?

For someone on a typical dual-fuel tariff paying by direct debit, bills will increase by around 28p a month, bringing the average annual bill to £1,758.

“While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets,” said Tim Jarvis of Ofgem.

“The price cap helps protect households from overpaying for energy. 

“But it’s only a safety net and there are practical ways that customers can pay less for their energy.”

Should I fix my energy or not?

With the cap going up, you might be asking if now’s a good time to fix your energy deal now or stick with a variable tariff.

If you value stability and certainty, and you’ve found a fixed deal close to or lower than the current cap, it might be worth locking in now.

But if you’re willing to take the risk that prices could rise or fall, and prefer the flexibility of switching later, then staying on a variable tariff might suit you better.

We’ve broken down the pros and cons to help you decide.

Action on energy bills rumoured in Budget

Chancellor Rachel Reeves has already pledged to take steps to bring down the cost of living in this month’s Budget.

Reports suggest she’s looking at scrapping VAT from energy bills, which could make a big difference to people struggling with the cost of gas and electricity right now.

However, this is just speculation at the moment, so we’ll have to wait until 26 November to hear what she announces.

Speak to your supplier if you’re struggling

With the energy price cap going up yet again, keeping up with ever-increasing bills can be a struggle.

So if you’re finding it hard, speak to your supplier, as they might be able to offer help such as:

• grants
• payment plans
• advice on managing your account
• emergency credit if you’re on a prepayment meter

You could also join the Priority Services Register for extra support.

See what other benefits you could claim

You might be eligible for financial support to help you manage rising living costs, such as a council tax discount or housing benefit.

Give us a call or use our free benefits calculator to find out what you could be eligible for.

Cut your energy usage

Making just a few small changes to how you use energy could help you cut your bill substantially.

For instance, you could avoid overfilling the kettle before boiling it and only turn on the dishwasher when you’ve got a full load.

These aren’t big lifestyle changes that require lots of effort, but the savings could quickly add up.

Check out our list of 50 smart energy-saving tips for ideas on where you can save energy.

Create a household budget

If you feel anxious whenever your energy bill arrives, look at how much money you have coming in and where it’s going.

You’ll then be able to work out where you can make savings and free up cash for essential expenses like bills.

Check our guide on how to create a budget and try our free budget planner.