Energy bills for millions to rise in January after surprise price cap increase

Household energy bills are set to rise by 0.2 per cent from 1 January after Ofgem increased its next price cap.

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

This amounts to an average overall bill of £1,758 per year for those on a default tariff, up from the current £1,755.

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

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

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.”

Shadow energy secretary Claire Coutinho said: “Ed Miliband promised to cut everyone’s energy bills by £300, but more and more experts are sounding the alarm that his plans will lock us into paying higher bills for decades.

“Despite gas prices falling, independent experts, energy suppliers and academics say it’s the extra costs of Ed’s net zero targets that are putting upward pressure on bills.

“This week we had a report that green levies on bills will soar by another £260 by 2030. We simply cannot afford this – cheap energy has to come first.”