Millions of UK households have been prompted to submit their meter readings as energy suppliers hike up the prices yet again. Brace yourselves for the upcoming 3% increase expected in April.
Starting from New Year’s Day (Wednesday, January 1, 2025) residential energy bills across England, Scotland and Wales are seeing a 1.2% uptick following Ofgem’s decision to adjust its price cap in line with surging wholesale energy costs. This surge coincides with a troubling drop in temperatures and forecasts of heavy snowfall.
Meanwhile, energy market experts at Cornwall Insight are adjusting their projections from an anticipated 1% rise to a nearly 3% jump in April’s price cap. Dr Craig Lowrey, principal consultant at Cornwall Insight, expressed that the revision of the forecast will be disheartening for many, saying: “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.”
Dr Lowrey cautions everyone to stay wary, noting: “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 Donald Trump’s presidency on the horizon and uncertainties surrounding Ukraine and the Middle East, market instability seems likely to persist.
Dr Lowrey points out: “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.” He does not fail to mention that other pending decisions by Ofgem and the Government could also influence future pricing, adding: “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.”
The difference between a week’s worth of energy at January’s rates compared with December’s is £6.67 for the average household
(Image: GettyImages / Westend61)
Ofgem is encouraging customers to explore the growing choice among suppliers and find the best deal to help keep their bills down, stating households could save up to £140. The price cap doesn’t limit total bills, as householders still pay for the amount of energy they consume.
The latest price cap is 10% or £190 lower than a year earlier, and 57.2% or £2,321 less than during the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022. However, this comes as millions of pensioners are facing a winter with less support, after the new 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. Households on standard variable tariffs (SVTs) without a smart meter should record and submit their gas and electricity readings before New Year’s Day to avoid paying for any more energy than they need to at the higher prices.
Difference in a cost of a week’s worth of energy between December and January
The difference between a week’s worth of energy at January’s rates compared with December’s is £6.67 for the average household. Comparison site Uswitch calculated that the average household on an SVT is expected to spend £165 on energy in January compared with £135 in December, due to a combination of higher rates and increased usage at the start of the year.
Cornwall Insight analysts have forecasted a third consecutive rise in the energy price cap by 1% come April, which would push the average bill to £1,762 annually. This follows a 1% increase in January and a significant 10% surge last October.
Uswitch energy expert Elise Melville advised: “Submitting a meter reading may not be top of households’ to-do list this Christmas, but it’s worth doing to avoid the risk of paying more for their energy in the new year.” She added: “Customers who don’t have a smart meter should aim to submit their readings before or on Wednesday January 1, so their supplier has an updated – and accurate – view of their account..
Time to consider switching provider
Melville warned: “If you leave it any later than this, then some of your December energy usage could end up being estimated and therefore charged under the higher January rates.” She also suggested that now is the perfect time to switch energy tariffs, highlighting: “Now is also an ideal time to look at switching to a new energy tariff, as there are a range of fixed deals currently available that are cheaper than the January price cap.”
She explained the benefits of a fixed deal: “By opting for a fixed deal, you’re locking in those rates for the duration – which means households could have price certainty and avoid the ups and downs of the price cap. Make sure you are happy with how long the contract lasts and any exit fees for leaving early.”
Which? Energy editor Emily Seymour commented on the timing of the cap increase: “As we head into the coldest months of the year, many households will be concerned that the energy price cap is going up this week. It’s worth shopping around for energy deals – we’ve seen a number of tariffs on the market with rates cheaper than the new price-capped figures.”
“You should compare what your monthly payments would be on a fixed deal with what you’d expect them to be if you remain with the price-capped variable tariff to see what the best option is for you. As a rule of thumb, we’d recommend looking for deals cheaper than the price cap, not longer than 12 months and without significant exit fees.”
Several household bills are set to rise from the start of April. In England and Wales, water bills are expected to surge by an “extortionate” average of £86 next year alone. The regulator Ofwat has announced it will permit companies to increase average bills by £31 a year, culminating in a total rise of £157 over the next five years to £597 by 2030 to support a £104 billion sector upgrade.
This marks a 36% hike before inflation, which will also be compounded. Despite the average annual increase of £31, households will face a particularly steep climb from April, with an average jump of £86 or 20%, front-loaded into the upcoming year, followed by smaller percentage increases over the subsequent four years.
Council tax is also on the upswing from April 1, with many local authorities opting for the maximum hike of 4.99%. However, some councils under financial strain are pushing their rates even higher, such as Birmingham City Council, which is imposing a 10% increase.
TV licence fees will also rise in line with inflation, meaning the cost of a standard colour TV licence will increase by £5, going up from the current £169.50 to £174.50.
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