Millions of households across England, Scotland and Wales are facing higher energy bills from today, as Ofgem's price cap rises by 0.2% during the coldest months of the year. The increase adds £3 annually to a typical household's bill, lifting it from £1,755 to £1,758, while amber cold health alerts have been issued for the North East and North West of England and yellow warnings cover most other regions.
The timing intensifies concerns for families already struggling with heating costs during what campaigners describe as a "fifth winter in the energy bills crisis." Standing charges are also rising, up 2% for electricity and 3% for gas. The UK Health Security Agency has issued amber cold health alerts for northern England until noon on January 5, with temperatures expected to drop to 3-5C, while parts of Scotland face a yellow warning for snow and ice.
The price cap sets maximum unit rates for gas and electricity for customers on variable tariffs, but does not limit total bills, which depend on consumption. The current increase is primarily driven by funding for the £38 billion Sizewell C nuclear power plant in Suffolk, adding an average of £1 per household monthly, and costs associated with the Warm Home Discount scheme providing £150 to around 2.7 million low-income households this winter.
Crisis persists despite future relief
Despite the marginal rise, experts forecast significant relief from April when the price cap is expected to fall 8% to £1,620 annually, a drop of £138. Chancellor Rachel Reeves announced in November's Budget a £150 reduction from April by scrapping the Energy Company Obligation scheme and shifting some costs to general taxation. However, the government's £300 reduction target by 2030 remains distant, with bills still well above pre-crisis levels.
Ned Hammond, deputy director of Energy UK, warned the situation remains dire. «While the new price cap coming into force only includes a small rise, it still means energy bills are too high for too many households. Gas prices may have declined in recent months but remain higher than previous years, while increasing policy costs are also adding to bills,» he said. «However, even with this intervention, energy bills are expected to remain well above pre-energy crisis levels. With over six million households in fuel poverty and domestic energy debt reaching record highs of around £5.5 billion, a comprehensive plan is needed to further bring down bills and truly address these challenges.»
Simon Francis, coordinator of the End Fuel Poverty Coalition, said the increase hits hard despite its size. «It really is a case of every little doesn't help as households spend a fifth winter in the energy bills crisis. Tiny movements in the price cap still hit hard for families choosing between heating and eating,» he stated. «Meanwhile, the wider energy industry has made more than £125 billion in UK profits since 2020, including firms operating in a dying North Sea. This isn't a crisis of scarcity, it's a crisis of priorities. Ministers must move beyond short-term price cap tweaks and get serious about ending fuel poverty by investing in energy efficiency, reforming energy pricing, introducing a fair social tariff and fully funding the Warm Homes Plan.»
Consumer action recommended
Emily Seymour, energy editor at consumer group Which?, advised households to shop around immediately. «As we head into the coldest months of the year, many households will be concerned that the energy price cap will increase slightly in the new year. There are several deals on the market for lower than the price cap so now is a good time to shop around if you're looking to fix. As a rule of thumb, we'd recommend looking for deals cheaper than the current price cap, not longer than 12 months and without significant exit fees,» she said.
Consumers on variable tariffs should submit meter readings to ensure they pay the cheaper rates for energy used before the new cap took effect. Most energy providers have confirmed they will pass on April's savings to customers on fixed tariffs.
Dr Craig Lowrey, principal consultant at Cornwall Insight, welcomed the April forecast but warned of underlying challenges. «Households will welcome a cut in April, bringing the cap to its lowest level since 2024. That's a step towards the Government's £300 reduction target by 2030 and will ease some pressure on both families and policymakers,» he said. «But we need to be clear – costs aren't vanishing, they're shifting. Moving the Renewables Obligation from bills to taxation may feel like a win, but ultimately, it's still going to be paid by the public. Crucially, as we move forward, vulnerable households must be protected. Cutting bills today is welcome, but without targeted support and a clear plan for fairer funding, the benefits of net zero could bypass those who need them most.»
Households can access cold weather payments of £25 per week when temperatures hit 0C or below for seven consecutive days in their local area. The current price cap is £37 lower than the same period last year, adjusted for inflation, but remains significantly above pre-crisis levels.
Note: This article was created with Artificial Intelligence (AI).
