Good morning. Ofgem, the energy regulator, has raised the average annual energy cost for British households to £1,738.
Household energy bills will rise by £21 from January, delivering another setback to millions of pensioners who face losing their winter fuel payments.
Ofgem announced on Friday that the price cap for a typical dual-fuel household paying by direct debit will increase from £1,717 to £1,738 annually, starting January 1.
Hopes that the price cap would remain unchanged or decline have been dashed, as forecasts of a cold winter drive global gas prices higher.
The rise adds to mounting pressure on Labour over its decision to cut the £300 winter fuel allowance, limiting it to pensioners eligible for other benefits. This change will result in an estimated 10 million households losing access to the payment.
New government analysis suggests the policy could push 100,000 pensioners in England and Wales into relative fuel poverty this year. The findings were released earlier this week amid plummeting temperatures and the UK’s first snowfall of the season.
Energy market experts at Cornwall Insight warn that prices are unlikely to drop significantly anytime soon. They note, “While prices have stabilised compared to the past two years, the market remains highly sensitive to global events, keeping them well above historical averages.”
Although slight reductions in the price cap are forecast for April and October 2025, these remain uncertain and heavily dependent on global market conditions.
Caroline Abrahams, director of Age UK, expressed concern over the combined impact of the loss of the Winter Fuel Allowance and the latest energy price rise on pensioners.
She stated: “Older people struggling without their Winter Fuel Payment, who had been hoping for a reduction in energy prices to ease their burden in the New Year, will be bitterly disappointed by today’s news.
“The slight increase in the energy price cap is yet another setback for pensioners on low or modest incomes, particularly those who do not receive Pension Credit—either because they don’t claim it or are ineligible.
“There are millions of older people in this situation, and many are clinging to the hope that something will change to alleviate their struggles over the coming months, especially as the weather turns colder.”
