UK energy price cap to rise by £21 in January

Energy bills for most households in Britain will rise by an average £21 to £1,738 a year from January, increasing the pressure on millions of people.
Ofgem, the energy regulator, raised the price cap by 1 per cent, from £1,717 in the present quarter, in response to a rebound in wholesale gas prices amid mounting global political turmoil and extreme weather events.
Britain faces heavy rain, strong winds and disruptive snow as the second named storm of the year, Bert, hits the country this weekend.
Tim Jarvis, director-general of markets at Ofgem, said: “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.
“However, with more tariffs coming into the market, there are ways for customers to bring their bill down so please shop around and look at all the options.”
European gas prices have risen to a 12-month high to trade at €48.7 per megawatt/hour, from a 30-month low of €24 per MWh in February, after demand for Asia following summer heatwaves has pushed up international competition for supplies.
Britain has become more reliant on liquefied natural gas imports as it has attempted to wean itself of Russian pipeline supplies after the invasion of Ukraine.
The increase in prices this winter will put renewed pressure on millions of Britons who have struggled to pay their bills as energy costs have risen sharply. Bad debts, which are unlikely to be recovered, have risen to a record £3.7 billion, according to the latest figures from Ofgem.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “As the temperatures plummet, a fourth winter of the energy bills crisis looms large in people’s minds.
“The decision to introduce a price cap change in the middle of winter was taken by Ofgem in 2022 and was described as an inhumane policy at the time. No wonder it has been opposed by campaigners ever since as households will have to find more money to keep themselves warm at the worst possible time.”
The price cap set by Ofgem for the October quarter assumes a daily standing charge of 60.97p for electricity and 31.65p for gas, down from 60.99p and 31.66p, respectively, in the previous quarter.
About ten million pensioners are already feeling the pinch in the colder months after the chancellor scrapped the winter fuel allowance for those not in receipt of pension credit or some other means-tested benefits.
The energy price cap, introduced by the government in 2019, limits the price that suppliers can charge households for each unit of gas and electricity on standard tariffs. It was designed to protect consumers and is updated regularly, based on the regulator’s assessment of the costs that an efficient supplier should incur.