Energy regulator Ofgem has today [Friday 22 November] announced a
1.2% increase of the energy price cap for the period covering
January-March 2025.
The change to the price cap – which sets a maximum rate per unit
and standing charge that can be billed to customers for their
energy use – will rise by £21 for an average household per year
or around £1.75 a month.
For an average household paying by Direct Debit for dual fuel
this equates to £1,738 per year. This is 10% (£190) cheaper
compared to January-March 2024 (£1,928) and 57.2% (£2,321) less
than the energy crisis (January-March 2023).
It comes as analysis by Ofgem shows around 1.5million households
switched tariff over the past three months. The regulator is
urging customers to take advantage of the rising choice in the
market and look for the best deal to help keep their household
bills down. By switching, savings of up to £140 are currently
available.
Following a call by Ofgem in August for suppliers to offer more
choice with low and no-standing charge tariffs, there has been an
increase in the number of suppliers offering these kinds of
deals. There are currently 8 available that are at least 10%
below the level set in the price cap.
However, while these come with a lower standing charge, they do
have a higher unit rate. They could benefit customers with lower
energy usage but will not work for everyone, so consumers should
carefully consider what works for them.
Tim Jarvis, director general of markets at Ofgem,
said:
“While today's change means the cap has remained relatively
stable, we understand that the cost of energy remains a challenge
for too many households. However, with more tariffs coming into
the market, there are ways for customers to bring their bill down
so please shop around and look at all the options.
“Our reliance on volatile international markets - which are
affected by factors such as events in Russia and the Middle East
– means the cost of energy will continue to fluctuate. So it's
more important than ever to stay focused on building a renewable,
home-grown energy system to bring costs down and give households
stability.
“In the short term though, anyone struggling with bills should
speak to their supplier to make sure they're getting the help
they need and look around to make sure they're on the best, most
affordable deal for them.”
The regulator is encouraging customers to consider the way they
pay their bills. Around 5 million customers pay by standard
credit payments – which means paying for energy after it has been
used. But this is much more expensive, particularly over the
winter months. Customers could save £100 by simply switching from
standard credit payments to Direct Debit payments or smart PPM
which remains the cheapest way to pay for energy.
The cheapest deal on the market could save a typical dual fuel
customer £210 compared to the upcoming price cap level. However,
this requires signing up for an additional boiler cover
service.
There are other cheaper fixed deals on the market which don't
require additional services that could save customers more than
£140 per year compared to the upcoming cap level.
If consumers are worried about paying their bills, they can
contact their supplier for support. Ofgem's rules mean they must
work with their customers to agree an affordable payment plan.
They may also be able to help by offering more time to pay,
access to hardship funds and advice on how to use less
energy.
ENDS
Notes to editors
Ofgem recently launched its new consumer confidence
programme which will focus on defining the outcomes
it wants the sector to deliver, redesigning the regulations and
incentives to deliver those outcomes, and ensuring Ofgem has the
right powers. This builds on Ofgem's Consumer Interest Framework
which aims to ensure fair prices, a high-quality service, a
low-cost transition to net zero and a resilient sector. This
includes rules to make contacting suppliers for help with bills
quicker and easier.
Energy price cap |
Ofgem
The energy price cap was introduced by the government and has
been in place since January 2019, and Ofgem is required to
regularly review the level at which it is set. It ensures that an
energy supplier can recoup its efficient costs while making sure
customers do not pay a higher amount for their energy than they
should. The price cap, as set out in law, does this by setting a
maximum that suppliers can charge per unit of
energy.
New number of customers on Standard Variable Tariffs (SVT)
– ‘around 26 million' of
which:
- New no. of SVT Direct Debit customers – ‘around 16
million'
- New no. of SVT Standard Credit customers – ‘around 5
million'
- New no. of SVT PPM customers – ‘around 4
million'
Total number of customers on fixed tariffs ‘around 7
million' (with the vast majority being
non-PPM).
*Latest Financial Responsibility RFI data is for October-24.
Tariff and customer Account RFI data is as of October-24 (used to
calculate the SVT payment splits).
