Energy price cap: Typical bill to rise by £21 a year in January

Energy bills for a typical household will rise by £21 a year in January, the energy watchdog has announced.

It means someone paying by direct debit and using a typical amount of gas and electricity will pay £1,738 a year, which remains high compared with pre-Covid norms.

Prices rose in October and with a similar level now confirmed for the rest of the winter, charities are warning many will struggle to cope with bills or choose to go without heating at the coldest time of year.

The quarterly cap by regulator Ofgem sets a limit on the cost of each unit of energy, and affects 26 million households in England, Wales and Scotland.

The cap is 1.2% higher than current levels, and means a household bill will typically rise by £1.75 a month.

It is also 10% down on the same period last year, but Ofgem said many billpayers would still be stretched.

“We understand that the cost of energy remains a challenge for too many households,” said Tim Jarvis, from the regulator.

“However, with more tariffs coming into the market, there are ways for customers to bring their bill down so please shop around and look at all the options.”

While the cost of each unit of gas and electricity is capped, the total bill is not. So, a long, cold winter could see higher energy use and high bills.

Energy companies say they have put extra support in place to help customers cope with the situation, such as emergency credit, hardship funds or striking off some debts or standing charges.

However a period of high prices – which analysts say is likely to continue – means households have collectively built up debt of £3.7bn to suppliers.

The average household in arrears owes more than £1,500 for electricity and £1,300 for gas.

The charity National Energy Action said many people were already “rationing their energy use” or building up debt to try to keep warm.

“Targeted government support is essential to save millions from the misery and danger of a cold home,” said Adam Scorer, its chief executive.