The Ofgem price cap is rising from £1,717 a year to £1,738 from tomorrow – but Cornwall Insight predicts it will go up again in April to £1,783
Energy bills are predicted to rise again next spring, in what will be another cost of living blow for millions of households.
The Ofgem energy price cap sets the maximum amount you can be charged for unit rates of gas and electricity, as well as standing charges. For the average household that pays by direct debit, the price cap is rising from £1,717 to £1,738 a year from tomorrow (January 1) – but experts are now expecting a further increase in April.
The Ofgem price cap is updated every three months, and Cornwall Insight currently predicts it will rise to £1,783 a year – up almost 3%. At the highest point, energy bills soared to above £4,000 in the winter of 2023, but households were covered by the temporary Energy Price Guarantee cap which saw energy bills capped at £2,500.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “The news of a rise in our forecast will be disappointing to households’ who will no doubt have been hoping for relief from recent cap rises. However, the turbulence in wholesale markets – a level of volatility we haven’t seen for months – reminds us to remain cautious of predictions, which could very well increase or decrease several times before the April cap is set.
“With a Trump presidency on the horizon, and an uncertain geopolitical situation in the Ukraine and the Middle East, wholesale market volatility looks set to remain. To add to the wholesale turbulence, other cost measures being decided upon by Ofgem and the government have the potential to move the cap up or down. As we look ahead, consumers must brace for continued fluctuations.
“Ultimately, the security of energy supply, and Ofgem’s evolving policies will shape the trajectory of bills as we move into 2025 and beyond. It’s crucial for policymakers and industry stakeholders to work together to ensure fair and sustainable energy pricing for households.”
Despite what its name suggests, the price cap does not actually limit how much you can pay for energy. The Ofgem price cap sets the maximum unit price you can be charged for gas and electricity, as well as the maximum daily standing charge, which is a fixed fee that you pay to be connected to the grid.
You are covered by the price cap if you’re on a standard variable rate (SVR) tariff – sometimes called a default or variable tariff. These are normally people who are not locked into a fixed deal, or those who didn’t switch to a new tariff when their previous fix expired. There are 26 million people who are on the price cap.
