Energy bill rise for millions as bills up £700 since 2021

The shock increase comes after experts at Cornwall Insight said they expected prices to fall by 1% because of lower wholesale energy prices.

But Ofgem said wholesale prices were currently stable and had fallen by 4% over the past three months, but that conditions remained “volatile”.

Simon Francis, coordinator of the End Fuel Poverty Coalition, says: "Energy bills remain stubbornly high as households face a fifth winter of the energy costs crisis. Today's announcement sees standing charges rise yet again, highlighting the structural problems in how energy is paid for.

"The addition of a new levy on bills which pays for nuclear power stations is unwelcome and could have been delayed until closer to when these plants actually start to generate electricity.

"Today's Ofgem announcement keeps the average energy bill at almost £700 above the levels of winter 2020/21 and over £150 more than at the 2024 General Election.

"Despite many people living in cold damp homes, the energy industry has posted more than £125 billion in profits in the UK alone in recent years.

"Yet some business lobbyists have called for the Chancellor to end the Windfall Tax. Instead, next week's Budget is a chance for the Government to finally get serious about ending fuel poverty.

"We need long-term investment in energy efficiency, not short-term thinking. We need action to bring down electricity prices, not excuses. And we need a fair tax regime that puts people before profiteers.

"If the Government truly wants to cut bills and protect the public, it must fully fund the Warm Homes Plan, continue to improve our energy security, introduce a fair social tariff, and reform our broken energy pricing system."

The regulator said energy bills will rise by about 28p a month for the average dual-fuel household in England, Scotland and Wales.

But Ofgem said that, when adjusting for inflation, the new price cap is £37 lower than between January and March in 2025.

Uplift Deputy Director Robert Palmer says: “Even a slight increase is bad news for hard-pressed families. It highlights why we need to de-couple the cost of electricity from expensive gas-fired power plants which currently dictate the cost of bills. And it shows why we must create a fairer system for all where energy companies aren’t allowed to rip us off and make billions in profits.”

What is the energy price cap?

For the average household paying by direct debit for gas and electricity, the overall bill will be £1,758 a year, up from the current £1,755.

Ofgem’s price cap sets a maximum rate per unit and standing charge that customers can be billed when they are not on a fixed tariff.

It does not limit total bills because households still pay for the amount of energy they consume.

The price cap change takes into account Government policy and operating costs, including funding the Sizewell C nuclear project, which is thought to add around £1 a month to bills.

Tim Jarvis, director general of markets for Ofgem, said: “While energy prices have fallen in real terms over the past two years, we know people may not be feeling it in their pockets.

“The price cap helps protect households from overpaying for energy. But it’s only a safety net and there are practical ways that customers can pay less for their energy.

“While wholesale energy costs are stabilising, they still make up the largest portion of our bills which leaves us open to volatile prices.”

Ofgem said that some eight million customer accounts currently paid by standard credit to their energy supplier, but could be saving money if they switched their payment method to direct debit.

Dame Clare Moriarty, chief executive of Citizens Advice, said the 0.2% increase to the price cap “will mean another tough winter” for millions of households in debt to their supplier.

“With bills still drastically higher than before the energy crisis, and due to rise again from April, it’s high time for decisions about the longer term,” she said.

“In next week’s Budget, the Government must cut electricity bills by shifting some policy costs into general taxation, or spreading them more evenly between gas and electricity.

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“This could bring electricity bills down by hundreds of pounds, especially for those with the most stretched household budgets.”

Dhara Vyas, the chief executive of Energy UK, said the “urgency” of bringing down bills for people “feels even more stark given the drop in temperatures across the country”.

“The industry is keen to see the Government take action to reduce bills, in a way that brings the most widespread and lasting benefits for customers, for example by removing some levies from electricity costs,” she said.