Energy Prices Expected to Rise Slightly in New Year, Experts Warn
Domestic energy prices are set to increase marginally in the New Year, with a typical household expected to pay £1,736 annually from January, according to consultancy Cornwall Insight. This represents a modest £19 (1%) increase from the current annual bill of £1,717.
The energy price cap, which limits the maximum charge for gas and electricity units, affects 29 million households in England, Wales, and Scotland. The cap means that energy costs vary depending on property size and usage, with larger homes typically paying more.
Dr. Craig Lowrey from Cornwall Insight noted that while bills will remain largely unchanged from October, the lack of price reduction will be disappointing for many consumers. He emphasized that prices remain well above historic norms, with no immediate signs of returning to pre-energy crisis levels.
Several factors are contributing to the sustained high energy prices:
– Ongoing geopolitical tensions
– Adverse weather conditions
– Maintenance of Norwegian gas infrastructure
The market remains highly sensitive to global events, with experts suggesting that higher prices may become the “new normal.”
Peter Smith from National Energy Action charity expressed concern about the impact on vulnerable households. Many people are already rationing energy use or accumulating debt to stay warm, and the continued high wholesale prices offer no relief.
Looking ahead, Cornwall Insight predicts a slight drop in the energy price cap in April and October 2025. The consultancy suggested the government should consider protecting vulnerable consumers through measures like social tariffs.
The current political landscape has added complexity to energy affordability. The new Labour government has faced criticism for withdrawing winter fuel payments for many pensioners. At Chancellor Rachel Reeves’ first Budget, it was announced that future payments would only be made to those receiving pension credit or means-tested assistance.
The government argues this decision was necessary to address a financial “black hole” inherited from the previous administration. However, politicians and unions have warned that this could put older and disabled individuals at risk by forcing them to cut back on heating.
In Scotland, a couple has been granted permission to legally challenge both the UK and Scottish governments over these benefit changes, highlighting the ongoing debate about energy affordability and support for vulnerable populations.
The situation underscores the ongoing challenges in the energy market, with consumers continuing to face higher-than-normal prices. While the increase may seem small, it represents an additional burden for households already struggling with cost-of-living pressures.
As winter progresses, many will be watching closely to see how energy prices evolve and what further support might be available for those most affected by high energy costs.
