Ofgem has announced that the energy bill price cap is set to rise by 1.2 per cent from January 1 – but what does that mean for you?
MailOnline has teamed up with money-saving service Nous to bring you an exclusive calculator that can show exactly what the new cap means to you in seconds.
Today’s price cap elevation will push the average annual dual fuel energy bill for a typical household from £1,717 to £1,738.
And it comes after inflation rose to 2.3 per cent in October, overshooting the Bank of England‘s forecast of a 0.5 per cent hike, fuelling fears the cost of living crisis has no end in sight.
Energy consultants Cornwall Insight had previously predicted a one percent fall to £1,697, but said this was now no longer the case, coming as a blow after prices rose by 10 percent in October.
It comes as millions of pensioners face a winter with less support, after the Government decided to scrap winter fuel payments for those who do not receive pension credit or other benefits.
About 10 million pensioners will miss out on the payments of up to £300 this year as a result.
Starting with how your home is powered, enter your details into the Nous.co calculator below to see how your energy bills will change from January:
Energy bills are set to rise after Ofcom increased the energy price cap by 1.2 per cent from January
Brits are being urged to shop around for energy tariffs as the market has grown increasingly competitive
Greg Marsh, CEO and co-founder of AI household money-saver Nous.co, told MailOnline: ‘Energy bills are rising just as we go into the coldest months of the year.
‘At the same time, energy debt is at record levels, with households typically owing more than £1,000.
‘With this going on it’s crucial people aren’t paying too much. Fortunately most of us can save if we’re smart about it.’
As for what Brits can do to combat the winter fuel blues, Mr Marsh has some tips to shave the pennies off their bills ahead of, and after, January 1, which you can read below.
Brits are feeling the squeeze from their household energy bills just as the cold has moved in – following years of withering price hikes associated with the everyday cost of living.
There had been some relief in the energy sector after Ofgem dropped the price cap 12.3 per cent – cutting the average household energy bill by £238 in April.
The cap was further dropped to £1,568 in July – before rises began again last month.
The regulator says 1.5million people have switched energy tariffs in the last three months as the market has become competitive following the peak of the winter fuel crisis in early 2023.
At that time, the price cap was a theoretical £4,059 a year – but was capped at £2,500 for direct debit customers by the government’s Energy Price Guarantee.
Tim Jarvis, director general of markets at Ofgem, has warned energy prices may still fluctuate – with Russia’s ongoing invasion of Ukraine a heavy influence.
‘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,’ he said.
‘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.
‘Our reliance on volatile international markets – which are affected by factors such as events in Russia and the Middle East – means the cost of energy will continue to fluctuate.
‘So it’s more important than ever to stay focused on building a renewable, home-grown energy system to bring costs down and give households stability.
‘In the short term though, anyone struggling with bills should speak to their supplier to make sure they’re getting the help they need and look around to make sure they’re on the best, most affordable deal for them.’
Customers are being urged to continue shopping around for the best deals. As energy suppliers have jostled for position they have introduced tariffs with lower or even zero-rate standing charges, ideal for people who use less energy.
The price cap rise comes as the government scraps universal winter fuel allowances for pensioners – limiting it to those on certain benefits
Protests have called for the scrapping of the universal payment to be reversed (pictured: a protest outside Parliament last month)
Charities have slammed the January rise – which comes as the Labour government ends universal winter fuel payments for pensioners.
Only pensioners eligible for Pension Credit or a number of other means-tested benefits will receive the payment of up to £300 to help with fuel bills.
And official figures from the Department of Work and Pensions suggest that hundreds of thousands of Brits who are eligible for the payment aren’t claiming it.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said a ‘fourth winter of the energy bills crisis’ now loomed.
‘Already the average household will have paid over £2,500 extra for their energy than had we not been so exposed to volatile energy markets,’ he said.
‘To make matters worse, the new Government has cut back the levels of support available to some of the most at-risk elderly households.
‘While we welcome the Government’s long term plans to boost home energy efficiency to bring down bills and to improve energy security by stabilising prices, these reforms will take time to take effect and will be no comfort to those struggling this winter.’
The EPFC is among a number of organisations calling for a ‘social tariff’ for vulnerable Brits, such as pensioners or those on means-tested benefits.
David Southgate, policy manager at disability equality charity Scope, called the price hike a ‘bitter pill to swallow’ for the disabled, who often face higher bills because of their health and the need to use specialist medical equipment at home.
He added: ‘Our disability energy support services are hearing from disabled people who have cut back everything they can and racked up huge amounts of debt.
‘The Government urgently needs to step in and bring in discounted energy bills for disabled people.’
Nous.co’s Greg Marsh has issued a number of money-saving tips to Brits ahead of the price cap hike – including checking whether your smart meter is reading your energy usage properly
Pensioners have been urged to check whether they are eligible for Pension Credit – the benefit that could give them a winter fuel allowance
The government has urged those who think they could be eligible for the winter fuel allowance to apply – but they must fill out a 24-page, 243-question form to find out for sure if they can claim Pension Credit.
Last week, ex-pensions minister Baroness Altmann warned pensioners would freeze to death as they waited to hear back from the DWP, which says it has recruited an additional 500 staff to process the expected influx of applications.
She told the Sunday Express: ‘Those eligible for help may still not receive anything this winter unless some changes are made, which so far there is no sign of.
‘I truly fear for the lives of some of these frail, elderly people as the weather gets cold.’
Labour has sought to blame the previous Conservative government for the chaos of Britain’s energy market as it vowed to embark on a mission to produce ‘clean energy’.
A party spokesperson said this morning: ‘The Conservatives trashed Britain’s energy security by leaving us exposed to global shocks and working people are still paying the price.
‘From banning onshore wind to failing to deliver new nuclear, their reckless decisions sent bills soaring.’
How to keep your energy bills down this winter: Money-saving expert’s six top tips for cost-saving when it’s cold
Nous boss Greg Marsh has shared the following tips on how to avoid the winter blues when it comes to your fuel bills:
Take a meter reading on 31 December
‘Ofgem’s energy price cap is increasing on 1 January. If you don’t have a smart meter, make sure you take a manual reading before 31 December, so your supplier doesn’t think you’ve used extra energy under the new higher rates.’
Make sure your smart meter isn’t in dumb mode
‘Nearly 4 million smart meters in Britain aren’t working, meaning people are being charged based on estimated usage. This can lead to overpaying by hundreds. If readings on your bill are marked ‘e’, they’re estimates and could be wrong. You should submit regular manual readings if this is happening.’
Review your credit balance
‘If you pay your energy bills by direct debit, you should have built up some credit over the summer. If you’re in the red right now, your monthly payment is set too low and you’re at risk of building up a large debt over the winter. In November, you should have credit worth at least what you pay each month.’
Don’t ditch your direct debit
‘If you discover your direct debit is too low or too high, don’t ditch it entirely – it’s the cheapest method of paying for energy. Customers who pay by standard credit currently pay around £100 per year more than direct debit customers.’
Save more than £100 without committing to a fix
‘Most households are out of contract right now and can save by switching providers with Nous.co. The majority can save the better part of £150 on their energy bills, without having to commit to a fixed deal.’
Check if you’re eligible for Pension Credit
‘There are 880,000 pensioner households who are eligible for Pension Credit and not receiving it – and these households are also missing out on their Winter Fuel Allowance. Make sure you’re not one of those losing out – check whether you could be getting the payment on the Government website.’