Ofgem’s energy price cap will rise by 13% on 1 January 2025, the second increase in six months. For a typical household on a dual-fuel tariff paying by direct debit, that means an extra £180 a year, pushing the annual bill to roughly £1,850. The jump is driven by wholesale gas prices, which have climbed 20% since October, as reported by Yahoo Finance UK.
What the rise means for your bill
The cap, which sets the maximum unit price for electricity and gas on standard variable tariffs, will increase from 24.5p per kWh for electricity to 27.9p, and from 6.2p to 7.1p per kWh for gas. A typical 3-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity annually will see its monthly direct debit climb from £139 to £154. Households on prepayment meters face an even steeper increase, as standing charges are also rising by 3%.
Why your meter reading is your best defence
The catch is that suppliers often estimate usage when they don’t have a reading. If you don’t submit a reading before 1 January, your supplier may assume you used energy at the new, higher rate for days or weeks before the change. That could cost a typical household £60–£80 in overcharges, according to consumer groups. The fix is simple: take a meter reading on 31 December, submit it via your supplier’s app or website, and keep a photo for your records. Energy Saving Trust recommends doing this by 5pm on New Year’s Eve to ensure it’s processed in time.
Who qualifies, and who doesn’t
Every household on a standard variable tariff is affected. Those on fixed deals are protected until their contract ends, but the gap between fixed and variable rates has narrowed, so switching may not save much. Ofgem’s data shows only 12% of households are currently on fixed tariffs. The rest, about 19 million homes, will see their bills rise automatically. For renters with communal heating systems, the cap does not apply; they should check with their landlord or management company.
What to do now, and by when
Submit your meter reading by 31 December. Do it online, via your supplier’s app, or by phone if necessary. If you miss the deadline, submit a reading as soon as possible and dispute any estimated charges. For households struggling with the rise, the government’s Warm Home Discount offers £150 off electricity bills for low-income households, and the Energy Company Obligation scheme provides free insulation and heating upgrades. Eligibility details are on gov.uk. The price cap will be reviewed again in April 2025; analysts at Cornwall Insight expect a slight drop, but nothing close to pre-crisis levels.
Frequently Asked Questions
Your supplier may estimate your usage at the new, higher rate for the period before the change, potentially overcharging you by £60–£80. Submit a reading as soon as possible after the deadline and check your next bill carefully.
No. The cap only applies to standard variable tariffs and prepayment meters. If you're on a fixed-term deal, your rates are locked until the contract ends, but you may still benefit from submitting a reading if you switch after the rise.
