Energy Bills to Climb After Surprise Ofgem Rise

Energy bills will rise for millions of households from January after Ofgem the industry regulator announced a surprise rise in gas and electricity costs.

The quarterly price cap covering January to March will rise by 0.2% - increasing the average annual dual fuel energy bill to £1,758,  from £1,755 in the current quarter.

But this makes bills for this winter remaining about 50% higher than they were before the invasion of Ukraine triggered a rise in energy market prices, which in turn, triggered the cost of living crisis.

Ofgem said when adjusting for inflation, the cap is 2%, or £37, lower than the same period in 2025. The change in the cap – which dictates the maximum that suppliers can charge their 29 million household customers for each unit of gas and electricity – amounts to an increase of 28p a month for an average household.

Tim Jarvis, the director general for markets at Ofgem, told The Guardian: “While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets. The price cap helps protect households from overpaying for energy. But it’s only a safety net and there are practical ways that customers can pay less for their energy.”

The unexpected increase comes after experts at Cornwall Insight had said they expected prices to fall by 1% because of lower wholesale energy prices. Ofgem said wholesale prices were currently stable and had fallen by 4% over the past three months, but that market remained “volatile”. Cornwall Insight said it expects the cap to rise again in April, to £1,815.

Citizens Advice figures show that nearly 7 million people are living in households in debt to their supplier – or 10% of all households in Great Britain.  The average energy debt held by someone seeking support from the charity was nearly £1,700 at the end of October –  £700 higher than it was three years ago.

Simon Francis, the coordinator of the End Fuel Poverty Coalition, said: “Energy bills remain stubbornly high as households face a fifth winter of the energy costs crisis. We need long-term investment in energy efficiency, not short-term thinking. We need action to bring down electricity prices, not excuses. And we need a fair tax regime that puts people before profiteers.”

END