Energy costs for millions of households in Great Britain are set to increase as the energy regulator, Ofgem, announced a rise in gas and electricity prices effective January. The government-imposed price cap will increase by 0.2% over the next three months, translating to an additional £3, raising the typical annual dual-fuel energy bill to £1,758.
This unexpected increase comes despite earlier forecasts suggesting a potential decrease in energy costs due to falling wholesale prices. Industry factors, including rising costs associated with government energy policies, have contributed to this adjustment. The cap, which regulates the maximum rates suppliers can charge approximately 29 million household customers, will impose an additional monthly charge of 28p on average households.
Although the price cap adjustment reflects a rise, it remains lower by 2% or £37 in real terms compared to the same period in 2025. However, energy bills for the current winter season will still be about 50% higher than prior to the rise in energy prices following Russia’s invasion of Ukraine.
Experts from Cornwall Insight had recently predicted a potential decrease in the cap by 1% due to falling wholesale prices, but the situation appears to remain unstable. Currently, wholesale prices have decreased by 4% over the last three months, but volatility persists.
The increase will particularly affect households that depend more on electricity than gas, which counters government efforts to promote the use of electric cooking and heating appliances for environmental reasons. Martin Lewis, founder of MoneySavingExpert.com, noted that households with higher electricity usage would likely experience a 3% to 4% rise, as electricity prices have increased more significantly compared to gas.
The cap on electricity rates is set to rise by 5.1% to 27.69p per kilowatt-hour, attributed to higher government levies, while the gas cap will drop by 5.7% to 5.93p per kilowatt-hour. Lewis called attention to the need for public discussion regarding the increasing costs of policy-related levies.
In related developments, the UK’s energy debt has escalated from £2 billion three years ago to £4.4 billion this year, impacting around 10% of the population. The fuel poverty charity National Energy Action has urged the chancellor to address these energy debt levels, advocating for a reconsideration of environmental levies on energy bills. Plans to potentially remove the 5% VAT charge on electricity bills are also under consideration. Meanwhile, the government aims to implement long-term strategies to reduce energy bills sustainably.
Source: https://www.theguardian.com/money/2025/nov/21/energy-price-cap-great-britain-rise-january-fuel