British households are bracing for another increase in their energy bills as Ofgem announces a 1 per cent rise in the price cap, pushing typical annual costs up by £21 to £1,738 from January 2025.
The regulatory adjustment, marking the second consecutive increase this winter, reflects mounting pressures in wholesale gas markets amid escalating global political tensions and extreme weather events. Whilst more modest than October’s 10 per cent surge, the latest increase maintains household energy costs at approximately 50 per cent above pre-crisis levels, when average dual-fuel bills hovered around £1,100 annually.
European gas prices have climbed to a 12-month peak of €48.7 per megawatt/hour, rebounding significantly from February’s 30-month low of €24 per MWh. This uplift stems from heightened Asian demand following intense summer heatwaves, intensifying international competition for supplies.
According to Cornwall Insights, a respected energy consultancy, some relief may be on the horizon. Their forecasts suggest the price cap could decrease slightly throughout 2025, potentially falling to £1,713 in April with further reductions anticipated in July.
The timing of this winter price adjustment has drawn criticism from advocacy groups. Simon Francis, representing the End Fuel Poverty Coalition, expressed concern about the mid-winter implementation, describing it as “inhumane” as households struggle to find additional funds during the coldest months.
The government’s response to mounting energy costs has faced scrutiny, particularly following its decision to withdraw the winter fuel allowance from roughly 10 million pensioners not receiving pension credit or means-tested benefits. Ed Miliband, the energy secretary, has pledged government support whilst acknowledging the financial strain on families grappling with cost-of-living pressures.
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