Consumer champion Martin Lewis has issued a stark warning to millions of households across the UK, alerting them to a significant increase in their energy costs from the start of the new year.
New Year's Day price cap increase
From 1 January 2025, the energy price cap will rise by an average of 0.2 per cent, according to analysis by MoneySavingExpert.com. This change will affect customers of major suppliers including British Gas, EON, EDF, OVO, and Octopus who are on standard variable tariffs.
For a typical dual-fuel household paying by monthly Direct Debit, annual energy costs will climb to £1,758. Those using prepayment meters will face a slightly lower annual cost of £1,711 after the increase.
Who faces the steepest rises?
The situation is more severe for customers who pay for their energy upon receipt of their bill. Their annual costs are expected to jump to £1,894, which is £136 more than the price cap.
Martin Lewis explained the specific impact on different households. "So those on the Price Cap (all those on standard tariffs ie. if you've not fixed or got a special deal) with high electricity use and low or no gas use will see their bills rise by 3 per cent or four per cent come January 1," he said.
He added a crucial warning for certain households: "Those who rely primarily on electricity rather than gas could see much steeper increases." This is particularly concerning during the colder winter months when energy consumption for heating naturally rises.
Expert advice on managing costs
Energy comparison site Uswitch offered guidance to consumers. "This is a very small increase but our usage is likely to still be higher than usual during these months, so bills could end up rising by more than indicated by this price cap increase," a spokesperson advised.
They strongly recommended: "If you're on a standard variable tariff, you should compare energy deals because it's likely you'll be able to save."
Energy expert Ben Gallizzi echoed this advice, highlighting potential savings. "The price cap is set for a small increase, but this comes at a time when energy usage is higher, so bills could go up by more than you're expecting," he said.
Gallizzi pointed to a practical solution for many households: "There are fixed deals available to switch to that can save around £150 a year against the price cap. If you have the option of getting off a standard variable tariff and ditching the price cap, it's worth doing that now."
The warning serves as a timely reminder for consumers to review their energy arrangements as the new year begins, with switching tariffs presented as a key strategy to mitigate the impending rise in household bills.
