Money Matters: Energy price cap to rise in the new year
In this week’s Money Matters column, Housing Plus Group’s debt and energy manager Dan Bebbington explains how much your energy bills could change in January.
From January, the energy price cap will rise by 0.2%, nudging the typical annual bill from £1,755 to £1,758, for those paying for their gas and electricity together by direct debit.
There will be similarly small increases for those who have pre-payment meters or pay after receiving a bill, but the amounts will differ slightly.
The cap sets the maximum unit rates and standing charges suppliers can bill us for. Importantly, it doesn’t cap your total bill – what you pay depends on how much energy you use.
Industry regulator Ofgem says that while wholesale gas prices have fallen, electricity costs and standing charges are rising, meaning households with higher electricity use will feel the increase more.
So what does this mean for you? If you’re on a price-capped tariff, your bills will rise slightly in January. But with suppliers now offering competitive fixed deals again, it’s worth checking whether you could lock in a cheaper rate. Some fixed tariffs currently undercut the cap by up to £200 a year.
Fixing also gives certainty, as you’ll know exactly what you’ll pay each month, rather than waiting for Ofgem’s quarterly price cap announcements.
Deals change regularly, but suppliers such as Eon, EDF and Outfox the Market have been offering fixes below the cap. Some also include cashback or refer-a-friend incentives, boosting your savings. Switching is straightforward, and your energy supply won’t be interrupted.
If you’re hesitant about fixing because the cap might fall, remember that analysts aren’t predicting dramatic drops. In fact, the cap is expected to rise again in April, so fixing now could protect you from future increases.
Aside from fixed tariffs, there are also tracker deals that move with wholesale prices but guarantee to stay below the cap, offering another option for those comfortable with some fluctuation.
For up-to-date comparisons, check moneysavingexpert.com, or use sites like GoCompare and Uswitch.
If you’re struggling with bills, reach out to your supplier or charities such as Marches Energy Agency, LEAP, or National Energy Action. Housing Plus Group customers can also access tailored support from our free energy advice service, in partnership with the Cadent Foundation.
