Energy price cap to rise by 1.2% in January, Ofgem announces

Energy regulator Ofgem has confirmed a 1.2% rise in the energy price cap for the first quarter of 2025, adding £21 annually to the average household bill.

From January, a typical dual-fuel customer paying by direct debit will see their yearly costs increase to £1,738.

These adjustments reflect continued volatility in the wholesale energy market, driven by geopolitical tensions, Norwegian gas infrastructure maintenance, and weather-related factors.

Despite the increase, bills remain significantly lower than during the peak of the energy crisis in early 2023, when households paid 57.2% more, or £4,059 annually. Compared to January 2024, bills are 10% cheaper.

More tariffs available, potential savings for households

Over the past three months, 1.5 million households have switched tariffs, with Ofgem encouraging more to do so.

The regulator highlighted that some deals offer up to £140 in annual savings compared to the new price cap, while the cheapest tariffs could save up to £210, albeit with added boiler cover.

“While today’s change means the cap has remained relatively stable, we understand that the cost of energy remains a challenge for too many households,” said Tim Jarvis, Ofgem’s Director General of Markets. “It’s more important than ever to shop around and look at all the options.”

Expert advice for consumers

Emily Seymour, Which? Energy Editor, acknowledged the concerns many households are facing during the cold weather.

“With the temperatures at freezing this week, many households will be concerned that energy prices will remain high in the New Year,” she said.

“It’s still worth shopping around for energy deals—look out for any that might be cheaper than the January price cap when it comes into effect. Unfortunately, there’s no ‘one size fits all’ approach when it comes to fixing an energy deal—it will all depend on your individual circumstances.

“You should compare what your monthly payments would be on a fixed deal with what you’d expect them to be if you remain with the price-capped variable tariff to see what the best option is for you. As a rule of thumb, we’d recommend looking for deals cheaper than the price cap, not longer than 12 months and without significant exit fees.

“If you’re worried about affording your bills this winter, don’t suffer in silence. Speak to your energy company—they are obliged to help you if you’re struggling to pay your bills.”

Vulnerable households struggle as winter sets in

The increase has sparked concern for vulnerable households. Adam Scorer, Chief Executive of National Energy Action (NEA), said:

“Bills are around 50% higher than pre-crisis levels. With temperatures now plunging and far less support available, many are getting deeper into debt trying to keep warm. Targeted government support is essential to save millions from the misery and danger of a cold home.”

The NEA estimates that 6 million UK households are in fuel poverty, unable to afford adequate heating. The charity’s annual Fuel Poverty Awareness Day on 27 November will spotlight the issue and call for more support.

Help available for struggling customers

Ofgem reiterated its guidance for customers unable to pay their bills. Suppliers are required to offer affordable payment plans, extend payment periods, and provide access to hardship funds. Switching to direct debit payments or smart prepayment meters could also save households up to £100 annually.