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January Price Cap Rising 5%

A radiator close-up with its thermostatic valve
Author: Samuel Beckingham
Updated: Dec 06, 2023
3 minutes read

At the end of November, Ofgem announced an increase to the price cap in the new year. After energy costs dropped towards the end of 2023, bringing inflation down with them, bills are going to get more expensive again with a fresh start to 2024. Instead of the current £1,834, the new price cap will be £1,928 a year. Although, as always, this is only an average. If you use more, you’ll be charged more.

Why Is This Happening?

Fuel will always be more expensive in winter, as everyone starts to use more energy to heat their homes. Additionally, the wholesale price of gas has increased in the last few months, exacerbated by conflicts in the Middle East and elsewhere. What’s worse is that no government help was announced in the autumn budget two weeks ago.

What Will the New Rates Be?

Starting on 1st January, direct debit users will face unit rates of 28.62p/kWh for electricity and 7.42p/kWh for gas. Standing charges will change to 53.35p/day for electricity and 29.6p/day for gas. This means that rates have changed as they appear in the table below.

Although the changes are marginal, they have a big impact. The translated 5% increase equates to an additional £94 a year on energy bills. Although the standing charges have dropped by a miniscule amount, you’ll still be paying them even if you don’t use any energy.

2024 Predictions

Cornwall Insight has provided relatively accurate predictions for the price cap for many years. They are expecting the levels to fall slightly in April, but increase again by the end of next year. As such, any price cap below the current one is not likely until at least July 2024. According to their data, the UK will be in the same position this time again next year.

Analysts have stressed that this is unlikely to change much because the UK relies on importing energy. On average, households are paying at least £800 more for electricity and gas than they were at the start of the energy crisis. Even with the fiscal headroom the chancellor had before the recent budget, support for energy bills could have been set out. Instead, Jeremy Hunt opted for short-term election-boosting tax cuts.

Getting the Best Deal

Ofgem announced that while the news may be worrying, there has been an influx of deals on the market. It always pays to shop around for the best deal, and you may be able to switch supplier to receive a price freeze or a flexible deal that offers prices below the price cap. Before you lock yourself into one of these deals, you should consult proper advice first and review your options.

See How You Can Offset Costs

If you’re worried about the price increase and foreboding predictions in 2024, you may be able to receive money back in various ways. Not all households will benefit from the winter payments.

Flight Delay

If you’ve suffered from a delayed flight from a UK or EU airline, you may be entitled to up to £520 in compensation. What’s good about this is that compensation amounts are calculated per passenger, so if a family of four was delayed, you could be owed a whopping £2,080!

Mis-sold PCP

Personal contract purchase is the most popular way of driving a new car. However, it’s possible that deals were agreed that you weren’t fully clear on. For an agreement that was mis-sold, you could potentially receive £3,000–£15,000, depending on the number of cars you had.

PPI Tax

Historically, PPI payouts had a 20% tax taken from them before they were awarded to you. Thanks to the introduction of the personal savings allowance, you’re allowed to earn a certain amount of interest tax-free each year. A PPI tax claim means you can claim some or all of this tax back.