A ‘last-chance’ warning has been issued to UK householders who are facing an energy bill rise in the New Year. The Ofgem price cap is rising again and will mean an average dual-fuel bill going up by £21 from £1,717to £1,738 on January 1, which comes on top of the £149 rise from £1,568 to £1,717 in October.
Customers with providers including British Gas, Octopus, EDF, and E.ON are urged to get a meter reading on December 31 and send it in before the new charges come into effect. In some cases, readings submitted on January 1 will be regarded as up to the end of the previous day, so that could still be okay. But leaving it any longer could mean being billed at the new higher rates.
Nine million households have been urged to send meter readings to their energy supplier as prices rise again – with a further 3 per cent increase forecast for April. Submitting your latest reading before the price cap hike means a clear cut-off point between the different energy rates.
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The average electricity tariff for England, Scotland and Wales will go up from 24.5p per kWh to 24.86p and the average gas tariff from 6.24p per kWh to 6.34p. Standing charges will drop very slightly from 60.99p to 60.97p a day for electricity and 31.66p to 31.65p for gas.
There are regional variations in the new tariffs. For the Midlands, the single rate electricity tariff for direct debit customers is going up from 23.83p per kWh to 24.19p and the standing charge dropping from 63.62p a day to 63.6p a day. The electricity multi-rate (such as those with Economy 7 offering cheaper night-time prices) for the Midlands is going up from 22.74p per kWh to 23.23p while the standing charge falls from 63.62p a day to 63.55p.
Gas users in the Midlands will see the tariff rise from 6.2p to 6.3p and the standard charge stay at 31.67p a day.
For those people with a pre-payment meter, the Midlands electricity tariff for single-rate use will increase from 23.01p a day to 23.37p while the standing charge falls from 63.62p a day to 63.6p. Multi-rate customers in the region will notice prices go from 22.11p per kWh to 22.6p per kWh and the daily standing charge reduce from 63.62p to 53.55p.
For gas pre-payment households in the Midlands, the tariff will rise from 5.95p per kWh to 6.05p per kWh and the standard charge stay the same at 31.67p. If you aren’t in the Midlands, you can see details of your own area in the Ofgem table here.
The increase takes effect just as temperatures are set to plunge and many face warnings of snow. It also comes as analysts Cornwall Insight revised up their previous forecast of a further 1 per cent increase to the price cap in April, now suggesting households will face an almost 3 per cent hike.
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 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.”
Ofgem has urged customers to take advantage of increasing choice among suppliers and look for the best deal to help keep their bills down, saying households could save up to £140. The latest price cap is 10 per cent or £190 lower than a year earlier, and 57.2 per cent or £2,321 less than during the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022.
But it comes as millions of pensioners are receiving less support with heating costs, after the new government decided to scrap Winter Fuel Payments for those who do not receive Pension Credit or other income-based benefits. About 10 million pensioners will miss out on the payments of up to £300 this year.
Households on standard variable tariffs (SVTs) who do not have a smart meter are advised to 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. 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.
Uswitch energy spokeswoman Elise Melville said: “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. 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.
“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. 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.
“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 said: “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.”
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