Energy payments will rise in January AND April subsequent 12 months, consultants predict – and internet zero targets are partially responsible
- But there is still good news on the horizon, as bills might fall from the summer
Household energy bills will rise twice next year, according to experts at Cornwall Insight.
Energy regulator Ofgem’s average price-capped bill, currently £1,717 a year, will rise to £1,738 from 1 January 2025.
But the average bill will then rise to £1,782 from April 2025, or 2.5 per cent, according to its forecasts.
Cornwall Insight has correctly predicted price cap movements since energy bills began rising in 2021.
This April energy bill rise would reflect turbulence in energy markets and the extra cost of regulatory change to gas and electricity in the UK, Cornwall said.
These reforms will see every energy bill rise by at least another £20 to fund subsidies to energy firms trying to meet the Government’s net zero targets.
Getting hot: Energy bills are due to rise twice, but there could be some good news in 2025
However, there could be some better news for energy bills from July.
A Cornwall Insight statement said: ‘Looking further ahead, current forecasts suggest a drop in energy prices this July.
‘However, we do not currently know the long-term impact of the recently announced extensions of nuclear plants – Torness in East Lothian and Heysham 2 in Lancashire to 2030, along with Hartlepool and Heysham 1 to 2027 – on wholesale prices, and therefore household bills.’
But experts said any energy bill rise was bad news for households.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: ‘The latest forecast price cap rise will mean energy bills will be 70 per cent above what they were in winter 2020/21 – that’s more than £750 extra a year the average household has to find just to use similar levels of energy as a few winters ago.
‘This means more people living in cold damp homes, exposed to the health complications that come from living in fuel poverty.’
Ben Gallizzi, energy expert at Uswitch.com, said: ‘This predicted rise would mark a third consecutive hike for energy prices, adding to the current pain for households.
‘There are now a range of fixed deals available that are significantly cheaper than the predicted price cap for January, so it is well worth running a comparison to see how much you could save.
‘Right now, the average household could save up to £112 per year against the current price cap by switching to a twelve month fixed deal.
‘Consumers who are worried about paying their energy bill should check what energy help they are eligible for, and contact their supplier who may be able to offer support.’
What is the Ofgem price cap?
The price cap is a limit, set by Ofgem, which caps the maximum amount an energy firm can charge for the units of gas and electricity consumers use.
It also limits how much households pay in standing charges – the daily fees paid regardless of how much energy is used.
The price cap was introduced in January 2019 to prevent energy firms overcharging customers on variable-rate tariffs.
Almost all homes are now on tariffs regulated by the Ofgem price cap.
How does the price cap affect my energy bills?
This depends on what sort of tariff you have, your meter and how much energy you use.
From 1 January, the average household on a variable-rate tariff paying by direct debit will pay £1,738 a year for gas and electricity due to the price cap.
For those with prepayment meters, average price-capped yearly energy bills will rise by 1.2 per cent to £1,690 a year.
Meanwhile, those paying when being sent a bill will pay £1,851 a year, an increase of 1.2 per cent.
The typical home with an Economy 7 meter – for electricity only – will pay £1,150 a year from January 2025, an increase of 1.7 per cent.
But exactly how much you pay will vary depending on your energy use. This is because the price cap only limits the maximum you can be charged for the units of gas or electricity you consume. The more units you use, the more you pay, and vice versa.
