What is the energy price cap and how are gas and electricity bills changing?

Gas and electricity bills are going up again on 1 January, when the latest energy price cap takes effect.

Customers are encouraged to submit a meter reading to ensure they are charged the correct amount.

The energy price cap covers 26 million households in England, Wales and Scotland and is set every three months by the energy regulator Ofgem.

It fixes the maximum price that can be charged for each unit of energy on a standard - or default - tariff for a typical dual-fuel household which pays by direct debit.

Between 1 January and 31 March 2025, gas prices will be capped at 6.34p per kilowatt hour (kWh), and electricity at 24.86 per kWh.

This means the annual bill for a dual-fuel direct debit household using a typical amount of energy will go up to £1,738 per year, an increase of £21 from the previous cap.

Those who pay their bills every three months by cash or cheque will pay £1,851.

Analysts at forecaster Cornwall Insight, which tracks the energy market, expect prices to fall slightly in April and October 2025, but says that high domestic energy prices are likely to be "the new normal".

The cap does not apply in Northern Ireland, which has its own energy market.

Your energy bill depends on the overall amount of gas and electricity you use, and how you pay for it.

The type of property you live in, how energy efficient it is, how many people live there and the weather all make a difference.

The Ofgem cap is based on a "typical household" using 11,500 kWh of gas and 2,700 kWh of electricity a year with a single bill for gas and electricity, settled by direct debit.

The vast majority of people pay their bill this way to help spread payments across the year. Those who pay every three months by cash or cheque are charged more.

• Energy prices could vary at different times of day

Submitting a meter reading when the cap changes means you will not be charged for estimated usage at the wrong rate.

This is especially important when prices go up.

Customers with working smart meters do not need to submit a reading as their bill is calculated automatically.

Fixed-priced deals offer certainty for a set period - often a year, or longer - but if prices drop, you could be stuck at a higher price.

Ofgem says customers who want the security of a set price should consider fixed deals.

However, it recommends getting independent advice.

The price comparison site Uswitch says it is important to check whether fixed deals have exit fees before signing up and to make sure you fully understand the terms of the contract.

Because the price cap changes every three months, it is difficult to know with any certainty whether a fixed tariff is a good deal. The longer the fixed term, the greater the uncertainty.

Between January and March, households on prepayment meters will pay slightly less than those on direct debit, with a typical bill of £1,690, a rise of £21 from the previous quarter.

About four million households had prepayment meters in April 2024, according to Ofgem.

Many have been in place for years, but some were installed more recently after customers struggled to pay higher bills.

Rules introduced in November 2023 mean suppliers must give customers more opportunity to clear their debts before switching them to a meter. They cannot be installed at all in certain households.

• Energy firms pay out over force-fitting of meters

Standing charges are a fixed daily fee to cover the costs of connecting to a supply. They are typically 61p a day for electricity and 32p a day for gas, although they vary slightly by region.

Under the energy price cap, they have risen by 43% since 2019.

Campaigners argue standing charges are unfair because they make up a larger proportion of the bill of low energy users.

Ofgem has proposed that energy firms must provide a choice of price-capped tariffs from winter 2025, one which has a standing charge and unit rate - as is the case now - and another with no standing charge but a higher unit rate.

Customers would be able to choose which suits them best.

Separately, it wants a consistent approach from suppliers on how to deal with unpaid bills totalling £3.8bn.

Changes to the winter fuel payment mean more than 10 million pensioners are not receiving the money this winter.

Previously, it was paid to all pensioners in England and Wales born before 25 September 1957.

However, in July, the government said future payments would be made only to those on low incomes who received certain benefits, including pension credit.

The 2024 payment - worth £200 or £300 depending on individual circumstances - is paid automatically to eligible pensioners.

However, hundreds of thousands of people who are entitled to pension credit do not claim it, which means they will miss out on the winter fuel payment too.

• How much is the winter fuel payment and who can still get it?

The £500m Household Support Fund, which was introduced in September 2021 to help vulnerable customers has been extended until March 2025.

The Warm Home Discount scheme continues to offer a discount to eligible pensioners and low income households.

The government's Fuel Direct Scheme can help people to repay an energy debt directly from their benefit payments.

In addition, suppliers must offer customers affordable payment plans or repayment holidays if they are struggling with bills.

Most suppliers also offer hardship grants.

• What can I do if I can't pay my energy bill?
• Ofgem: Help with bills