Energy bills to rise by 5% in January as Ofgem announces new price cap

Energy regulator Ofgem has announced a 5% increase in the energy price cap for the first quarter of 2024.

This increase means that an average household paying by direct debit for dual fuel will pay £1,928 annually, a rise of £94 or approximately £7.83 per month. The price cap, which is updated every quarter, sets the maximum that customers can be charged for energy bills.

The increase is attributed to rising costs in the international wholesale energy market, influenced by market instability and global events, including the conflict in Ukraine. Ofgem says its priority is to protect consumers and ensure fair pricing.

The regulator is also working on plans to eliminate the ‘prepayment meter premium’, ensuring that prepayment customers are charged the same standing charge as direct debit customers. Meanwhile, a ‘Call for Input’ on standing charges is currently open until 19 January 2024.

Jonathan Brearley, CEO of Ofgem, said:

“This is a difficult time for many people, and any increase in bills will be worrying. But this rise – around the levels we saw in August – is a result of the wholesale cost of gas and electricity rising, which needs to be reflected in the price that we all pay. It is important that customers are supported and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills.

“We are also seeing the return of choice to the market, which is a positive sign and customers could benefit from shopping around with a range of tariffs now available offering the security of a fixed rate or a more flexible deal that tracks below the price cap. People should weigh up all the information, seek independent advice from trusted sources and consider what is most important for them whether that’s the lowest price or the security of a fixed deal.”