Ofgem Energy Price Cap Increases to Highest Level Since January 2024
Ofgem, the energy regulator, has announced an increase in the energy price cap for households paying by direct debit. The new cap will be set at £1,738 per year for the period between January 1 to March 31, 2025. This marks the highest level since January 2024, representing a 1.2% increase from the previous period of October 1 to December 31, 2024, when the cap stood at £1,717.
The rise in the energy price cap means that consumers on standard variable tariffs can expect their annual energy bills to increase. For the typical household, this could mean an additional cost of around £21 per year if paying by direct debit. However, the exact amount can vary depending on factors such as region, billing method, and meter type, as outlined by Ofgem.
Customers paying by standard credit may see an increase of approximately £22 per year, while those on prepayment meters could face a similar rise of about £21 annually. Households using Economy 7 meters are expected to experience an increase of around £19 per year. The energy price cap is determined by various cost elements, with the recent increase primarily attributed to a rise in wholesale energy costs by £19, alongside a £1 VAT increase.
Other costs, including network expenses, supplier operating costs, government schemes, and allowances for uncertain costs, have remained stable for this period. Ofgem reviews and adjusts the price cap every three months to ensure it aligns with current market conditions and safeguards consumers against abrupt price spikes.
The upcoming review dates are as follows:
– February 25 for the period April 1 to June 30
– May 26 for the period July 1 to September 30
– August 27 for the period October 1 to December 31
These regular updates are aimed at maintaining fair energy prices for those on standard variable tariffs. It is advisable for consumers on fixed deals or special tariffs to review their plans to understand if the cap will affect them. Comparing different deals can help ensure individuals are getting the best possible price for their energy usage.
For detailed information on the price cap calculation and included costs, consumers can visit Ofgem’s Energy Price Cap Policy and the Average Gas and Electricity Usage guidance. By staying informed and proactive, consumers can better manage their energy expenses amidst changing price caps and market conditions.
As the energy price cap rises to its highest level since January 2024, household budgets may face additional strain. Being aware of these changes and exploring money-saving tips can help consumers navigate the evolving energy landscape and make informed decisions regarding their energy usage and costs.