Energy bills will rise in January AND April next year, experts predict – and net zero targets are partly to blame

Household energy bills are set to rise twice next year, according to experts at Cornwall Insight.

The average capped price bill from energy regulator Ofgem, currently £1,717 per year, will rise to £1,738 from January 1, 2025.

But the average bill will then rise to £1,782, or 2.5 per cent, from April 2025, according to forecasts.

Cornwall Insight has correctly predicted price cap movements since energy bills started rising in 2021.

This increase in energy bills in April would reflect turbulence in energy markets and the additional costs of changes to gas and electricity regulations in Britain, Cornwall said.

These reforms will increase every energy bill by at least a further £20 to fund grants to energy companies trying to meet the government’s net zero targets.

However, there could be better news for energy bills from July.

A statement from Cornwall Insight said: ‘Looking further ahead, current forecasts point to a fall in energy prices in July.

‘However, we do not currently know the long-term impact of the recently announced nuclear power station extensions – Torness in East Lothian and Heysham 2 in Lancashire until 2030, along with Hartlepool and Heysham 1 until 2027 – on wholesale prices, and therefore on bills.’

But experts said any increase in energy bills was bad news for households.

Simon Francis, co-ordinator of the End Fuel Poverty Coalition, said: ‘The latest predicted price cap rise will mean energy bills will be 70 per cent higher than winter 2020/21 – that’s more than £750 extra per year for the average household must find to use similar energy levels as a few winters ago.

‘This means more people are living in cold, damp homes, exposed to the health complications that come from living in fuel poverty.’

Ben Gallizzi, energy expert at Uswitch.com, said: ‘This forecast increase would mark a third consecutive rise in energy prices, adding to the current pain for households.

‘There are a number of firm deals available now that are significantly cheaper than the predicted price limit for January, so it’s worth doing a comparison to see how much you can save.

‘Currently the average household could save up to £112 per year against the current price cap by switching to a 12-month fixed deal.

‘Consumers concerned about paying their energy bills should check what energy assistance they are eligible for and contact their supplier who may be able to provide support.’

What is the Ofgem price cap?

The price cap is a limit, set by Ofgem, that limits the maximum amount an energy company can charge for the units of gas and electricity consumers use.

It also limits how much households pay in fixed costs: the daily costs that are paid regardless of how much energy is used.

The price cap was introduced in January 2019 to prevent energy companies from overcharging customers for variable rates.

Almost all homes are now subject to rates regulated by the Ofgem price cap.

How does the price ceiling affect my energy bill?

This depends on the type of tariff you have, your meter and how much energy you use.

From January 1, the average household on a variable rate paying by direct debit will pay £1,738 a year for gas and electricity due to the price cap.

For those with pre-payment meters, average annual energy bills with a capped price will rise by 1.2 per cent to £1,690 per year.

Meanwhile, those who pay when they receive a bill will pay £1,851 a year, an increase of 1.2 per cent.

The typical home with a 7 meter Economy meter – for electricity only – will pay £1,150 per year from January 2025, an increase of 1.7 per cent.

But exactly how much you pay depends on your energy consumption. This is because the price cap only limits the maximum you can be charged for the units of gas or electricity you use. The more units you use, the more you pay, and vice versa.