The energy price cap has risen for millions of households today, with a typical household now paying £1,717 a year.
However, experts have forecast that prices will start to go down again in the new year – albeit slowly.
Below, we take a look at what is expected to happen to energy prices in the future, and how much you might be paying in 2025.
What is the new energy price cap?
Ofgem, the energy regulator, has increased prices by 10 per cent, meaning the average home will see an annual rise of £149.
Some 27 million households on standard variable tariffs are expected to see an increase.
It comes as the controversy surrounding the axing of the winter fuel payments for about 10 million pensioners continues – with many concerned about the increased cost they face.
What is expected to happen to the cap in future?
Despite today’s increase, new predictions from analysts, Cornwall Insight, suggests the cap will fall in January.
It is reviewed every three months by Ofgem to keep pace with the change in energy wholesale prices.
The forecasts suggest there will be a 1 per cent fall in January to an annual £1,697 for a typical dual fuel consumer.
This is a result of gas storage targets being met before the start of winter, strong global supply outlooks, and improved confidence regarding gas and electricity imports ahead of winter which has caused wholesale market prices to fall.
Looking further ahead, it expects prices to also fall slightly in the six months from April next year.
This will be good news for customers who were expecting further rises.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “While households will have to endure a rise in the cap from October, our current forecasts suggest that this is a temporary blip.
“January to March, typically some of the coldest months of the year, often bring with them the biggest energy bills, and – while our latest forecast is welcome news – it remains subject to the volatile wholesale gas and electricity markets.”
However, experts warn that despite prices expected to come down, they are still much higher than previous years.
Lowrey added: “While the negligible quarter-on-quarter drop is welcome, it must be remembered that bills will still remain hundreds of pounds above historic levels.
“While there is hope that a renewed focus on building a sustainable domestic energy supply could eventually lower bills as we reduce reliance on volatile imports, these benefits will take time to materialise. Meanwhile, many people are facing financial difficulties right now.”
How to lower energy bills
Many experts suggest households could look at fixing their energy bills to avoid volatility with the price cap.
These deals are locked in for a set amount of time and are not controlled by the price cap, unlike variable tariffs.
There are now several deals available that are cheaper than the current price cap.
The current cheapest fix is from Outfox The Market and costs £1,555 for households with average usage, which is £162 less than October’s price cap. There are several other deals from a range of suppliers offering savings of more than £100.
Elise Melville, energy expert at Uswitch.com, said: “A slight drop in the price cap in January might sound like good news to households, but this would still leave energy costs 8 per cent higher than fixed deals currently available.
“There are plenty of fixed energy tariffs that are cheaper than the October price cap and more are coming on to the market as competition increases.”
Households should also take regular meter readings to make sure they are paying the correct amount for their usage.
