Energy bills to increase from January - Ofgem

(Sharecast News) - Energy bills will increase by 5% from January, it was confirmed on Thursday, in response to higher wholesale gas prices. Ofgem, which regulates how much energy providers can charge customers, said the price cap would rise to £1,928 from £1,834, a £94 rise for households who use a typical amount of gas and electricity and pay by Direct Debit.

Ofgem said world events, including renewed conflict in the Middle East, had pushed up wholesale prices, prompting the increase.

The price cap has fallen significantly compared from a peak of £4,279, which it reached in response to the war in Ukraine.

However, the cap remains well above 2021 levels, when it was below £1,200.

Jonathan Brearley, chief executive of Ofgem, said: "This rise is a result of the wholesale cost of gas and electricity rising, which needs to be reflected in the price we all pay.

"It is important that customers are supported, and we have made clear to suppliers that we expect them to identify and offer help to those who are struggling with bills."

Danni Hewson, head of financial analyst at AJ Bell, said: "It's a timely reminder that inflation might be falling, but some prices are still rising.

"While it might work out at just £7.83 a month, that extra cost comes on top of all the other extra costs and doesn't come with the government help many families relied on this time last year."

The changes will come into effect from 1 January 2024.

Ofgem sets the maximum amount suppliers can charge per unit of gas and electricity, and not the total bill, meaning heavy users will pay more.