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

Household energy bills are expected to rise by 0.2% from January 1 after Ofgem raises its next price cap.

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

This means an average annual bill of £1,758 for those on the default tariff, compared to the current £1,755.

The unexpected rise comes after experts at Cornwall Insight said they expected prices to fall by 1% due to a drop in wholesale energy prices.

Ofgem said wholesale prices were currently stable, falling 4 per cent in the last three months, but conditions remained “variable”.

Tim Jarvis, director general of markets at Ofgem, said: “While energy prices have fallen in real terms over the last two years, we know people may not feel this in their pockets.

“Full price helps prevent households from overpaying for energy. But this is just a safety net and there are practical ways for customers to pay less for energy.

“While wholesale energy costs have stabilized, they still account for the largest portion of our bills, leaving us open to fluctuating prices.”

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

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

“We received a report this week that green taxes on bills will increase by a further £260 by 2030. We can’t afford that; cheap energy must come first.”