Energy bills are set to rise again after Ofgem announced a one per cent increase in its price cap from January 2025.
The new cap will see average dual fuel households paying £1,738 annually, up from the current £1,717.
The adjustment comes as part of Ofgem’s quarterly review system, which aligns consumer costs with wholesale market prices.
What is the Energy Price Cap?
The Price Cap sets a limit on the maximum amount suppliers can charge for each unit of gas and electricity people use, and sets a maximum daily standing charge (what they pay to have their home connected to the grid).
That means there’s no upper limit to what someone could actually pay – if they use more energy, they’ll pay more, use less and they’ll pay less.
It only applies to providers’ standard and default tariffs, so those on a fixed-term energy deal, are not on the price cap.
The adjustment comes as part of Ofgem’s quarterly review system, which aligns consumer costs with wholesale market prices
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The Price Cap changes every three months, in January, April, July and October. It is largely based on the costs suppliers face for providing energy.
The energy price cap is predicted to rise by another one per cent in April 2025, according to an analysis by Cornwall Insight, meaning a typical dual-fuel customer would pay £1,762 a year.
This would come on top of the one per cent increase confirmed by the energy regulator, Ofgem, to take place in January. This will see the price cap rise to £1,738.
Whilst the increase affects millions of British households, experts emphasise that actual bills will vary based on individual energy consumption patterns.
Andy Kerr, founder at BOXT said: “The Ofgem price cap sets the maximum suppliers can charge per unit of energy.
“Consumers should remember that the Ofgem price cap does not set the maximum a household will pay on their energy bills and need to remain vigilant about their usage to avoid receiving an unexpectedly costly bill.”
Energy experts advise that while consumers cannot influence the cap itself, they can take steps to reduce their consumption and manage costs effectively. The actual amount paid depends on several factors, including meter type and payment method.
Kerr outlined several practical measures to help households reduce their energy consumption.
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Upgrading to a modern A-rated condensing boiler can significantly improve efficiency, as older models may have ratings as low as G.
Maintaining optimal temperature settings between 18-21 degrees is crucial, with smart thermostats offering remote control capabilities.
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Installing thermostatic radiator valves allows room-by-room temperature control, reducing overall energy usage. Basic maintenance like bleeding radiators can improve efficiency by removing trapped air.
Proper insulation is essential, with simple solutions like a £15 hot water cylinder jacket offering immediate benefits.
During winter, experts recommend keeping heating at a minimum of 10 degrees, even when away, to prevent costly frozen pipe damage. These measures can help offset the impact of rising energy costs while improving home efficiency.
For long-term energy savings, households are being encouraged to consider renewable heating solutions. The Government’s Boiler Upgrade Scheme now offers £7,500 grants to make heat pumps more accessible to families.
When properly installed, heat pumps can deliver three times more heat energy than they consume, leading to reduced emissions and lower bills.
Solar panels present another sustainable option, despite significant upfront costs. Households could save up to £91 monthly, or £1,096 annually, on electricity bills by installing solar panels.
Solar technology works by capturing light rather than heat, ensuring continued energy generation even during winter months. These renewable solutions can help reduce dependency on traditional energy sources, making households less vulnerable to future price cap changes.
Kerr continued: “Whilst there are steps consumers can take to monitor their consumption, the global cost of energy is beyond their control.”
He stresses the need for nationwide changes in energy policy, stating: “Because of this, the UK needs to invest effort in helping consumers make their homes more energy efficient by investing more in sustainable energy sources.”
The BOXT founder calls for greater government intervention to support the transition to renewable energy.
He added: “Beyond the price cap, the Government needs to work towards improving the availability and affordability of alternative energy sources like heat pumps and solar panels to reduce households’ energy bills in the long term.”
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