UK Energy Bills Set to Rise Slightly in January

Published: 21 November 2025 Friday. The English Chronicle Desk. The English Chronicle Online

Millions of households across the UK are set to face a small rise in gas and electricity bills at the start of January, according to the latest announcement from energy regulator Ofgem. The regulator has outlined a new energy price cap that will see variable tariffs in England, Wales, and Scotland increase by 0.2%, taking effect from the beginning of the year. While the increase is modest, the timing coincides with the coldest period of winter, bringing energy costs sharply into focus for households across the country.

Despite the slight increase, prices will remain lower than they were during the same period last year. Ofgem highlighted that wholesale energy costs have largely stabilised after the volatility seen during the peak of the energy crisis. Nevertheless, wholesale prices still constitute the largest part of energy bills, meaning households are still vulnerable to fluctuations in the market. Tim Jarvis, a spokesperson from Ofgem, explained: “While wholesale energy costs are stabilising, they still make up the largest portion of our bills, which leaves us open to volatile prices.”

Dame Clare Moriarty from Citizens Advice stressed that the energy crisis is far from over. “With bills still drastically higher than before the energy crisis, and due to rise again from April, it’s high time for decisions about the longer term,” she said. Citizens Advice has repeatedly warned that households are facing severe financial pressure, particularly during the winter months when energy use naturally increases.

The Ofgem price cap is designed to set a maximum unit price for gas and electricity rather than a total household bill. This means that households with higher energy consumption will pay more. For illustration, a typical household using 11,500 kWh of gas and 2,700 kWh of electricity per year—paying by direct debit—would see their annual bill rise by £3, from £1,755 to £1,758. However, household consumption varies widely, so individual bills will differ. Ofgem encourages customers to calculate their own bills based on personal energy usage to understand the precise impact of the price cap change.

Energy affordability remains a major concern for the UK. Charities have reported an alarming increase in unpaid energy bills, with total debt owed to suppliers reaching a record £4.4bn. To address this, Ofgem has announced plans for energy companies to write off up to £500m of this debt early next year. This move is aimed at easing financial pressure on struggling households and ensuring that families are not forced to fall further behind on payments.

Dhara Vyas, chief executive of Energy UK, the industry representative body, urged households experiencing difficulty paying their bills to contact their energy suppliers as soon as possible. “We know that far too many people are struggling to pay for the energy they need to use,” she said. “Suppliers can provide help, including offering more efficient appliances, adjusting tariffs to suit customers’ needs, or ensuring households are receiving all relevant benefits.”

Analysts from energy consultancy Cornwall Insight noted that while wholesale energy costs are stabilising, government policy is becoming an increasingly significant driver of energy bills. Dr Craig Lowrey, principal consultant, explained: “This marks the beginning of a potential trend where the primary driver of higher bills will be government policies rather than rising wholesale energy prices. Households may face further increases in April, linked to the costs of running the energy network and transitioning to net zero.”

Dr Lowrey emphasised that investment in a low-carbon energy system, while initially increasing bills, will ultimately provide long-term benefits. “A low-carbon system means more energy security and less exposure to the rollercoaster of fossil fuel prices. These upfront costs represent an investment in stability and affordability for the long run, and that’s a message we need to keep front and centre. However, we cannot ignore the critical issue of immediate affordability for both households and businesses alike,” he said.

The government has indicated that it may introduce additional cost-of-living support measures in the upcoming Budget on 26 November. One of the options being considered is removing VAT from energy bills, which could reduce annual costs for households by approximately £80. Dr Lowrey warned that such measures are essentially “zero-sum” and merely adjust the presentation of bills. The underlying costs of running the energy infrastructure, including pipes, wires, and the electricity grid, would still need to be recovered either through bills or taxation.

Energy Minister Martin McCluskey highlighted that the government is taking immediate action to support households. “We know that energy bills remain too high. That is why we are taking immediate action, with millions more families receiving £150 off their bills through the expanded Warm Home Discount scheme this winter,” he said.

Meanwhile, political debate continues over the impact of net zero policies on household bills. Shadow Energy Secretary Claire Coutinho criticised Labour’s climate targets, arguing that they contribute to higher energy costs. “Ed Miliband promised to cut everyone’s energy bills by £300, but independent experts, energy suppliers, and academics are warning that the extra costs of net zero targets are putting upward pressure on bills,” she said.

Households are advised to take practical steps to manage energy consumption as temperatures drop. Tips include wearing warm clothing indoors, insulating homes effectively, using heating only in occupied rooms, and considering the most energy-efficient appliances for everyday use. While these measures cannot fully offset rising energy costs, they can help reduce the financial burden on families during the winter months.

Overall, while the rise in the January price cap is modest, the broader context underscores the ongoing challenges faced by UK households. Energy affordability continues to be a critical issue, and the combination of immediate support, long-term investment in a low-carbon system, and careful household management will be key in navigating the winter ahead.

As the government, regulators, and suppliers take steps to stabilise the market, households will need to remain aware of their energy usage, explore support options, and adopt practical strategies to manage their bills. The winter of 2026 may bring cold temperatures, but careful planning and support measures can help ensure that families stay warm without facing financial hardship.