UK household energy bills will rise by 0.2% from January 1, defying expert predictions of a price drop and adding to cost-of-living pressures as winter intensifies.
Regulator Ofgem confirmed the increase will push the average annual dual-fuel bill to £1,758, up from £1,755. The 28p monthly rise for typical households in England, Scotland, and Wales comes despite wholesale energy prices falling 4% over the past three months. Forecaster Cornwall Insight had predicted a 1% decrease.
The unexpected increase stems from government policy and operating costs, not wholesale market prices. These include funding for the Sizewell C nuclear project (adding around £1 per month to bills) and expanding the Warm Home Discount scheme to 2.7 million more low-income households, including 900,000 families with children receiving £150 off bills this winter.
Uneven impact across households
The headline 0.2% figure masks significant variation in actual costs. Electricity unit rates will rise 5.1% from 26.35p to 27.69p per kWh, while gas rates drop 5.7% from 6.29p to 5.93p per kWh. Standing charges increase by 2% for electricity and 3% for gas.
Consumer champion Martin Lewis warned the real impact for households with high electricity use and little or no gas will be 3% to 4%. Writing on X (formerly Twitter), Lewis said: "The headline is @Ofgem's energy Price Cap for the 3mths starting 1 Jan is to RISE 0.2% but that's only part of the story, elec costs are to rise a real amount while gas falls, and yet again the hated standing charges are rising."
Political clash over energy policy
Shadow energy secretary Claire Coutinho criticized the government's net zero targets, stating: "Ed Miliband promised to cut everyone's energy bills by £300 but more and more experts are sounding the alarm that his plans will lock us into paying higher bills for decades." She cited a report predicting green levies will "soar by another £260 by 2030".
Energy minister Martin McCluskey defended government action: "We know that energy bills remain too high. That is why we are taking immediate action, with millions more families receiving £150 off their bills through the expanded Warm Home Discount scheme this winter." He emphasized long-term efforts through the "government's clean power mission" and a "new golden age of nuclear".
Consumer groups demand action
Citizens Advice warned the increase "will mean another tough winter" for millions of households already in energy debt. Chief executive Dame Clare Moriarty said: "With bills still drastically higher than before the energy crisis, and due to rise again from April, it's high time for decisions about the longer term." She urged the government to shift policy costs into general taxation or spread them more evenly between gas and electricity.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said energy bills remain "stubbornly high as households face a fifth winter of the energy costs crisis". He criticized rising standing charges and the new nuclear levy as highlighting "structural problems in how energy is paid for".
Tim Jarvis, director general of markets at Ofgem, acknowledged consumer frustration: "While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets." He emphasized the price cap serves as a "safety net" and encouraged customers to explore different tariffs or payment methods, noting prepayment remains the cheapest option with average savings of £47.
Ofgem said it is working with government and industry to "boost clean energy and reduce our reliance on international sources we can't control".
Wholesale energy costs remain volatile despite stabilizing, and Cornwall Insight predicts a further rise of around £75 per year from April.
Note: This article was created with Artificial Intelligence (AI).
