Energy price caps will increase in January, placing further strain on households

In January, the cost of household electricity will increase, placing additional financial strain on consumers during the coldest season of the year.

The average yearly home bill would increase by £94, or 5%, from £1,834 to £1,928, according to energy regulator Ofgem.

It stated that although the increase in bills would be "worrying" for many during a trying time, suppliers were forced to bear the increased wholesale prices.

Prices are expected to decline further in March, according to analysts.

In England, Wales, and Scotland, 29 million homes are impacted by the regulator's pricing cap. In Northern Ireland, there are distinct rules. You will pay more if you use more since Ofgem regulates the maximum price that suppliers may charge for each unit of gas and electricity, not the overall bill.

To be more precise, gas will cost 7p per kWh and electricity will cost 29p per kWh.

Most individuals use direct debit to make their payments, which are spread out over the course of the year.

Winter price increases will mostly impact households with prepayment meters because these customers typically top up their meters right before using gas and electricity. In January, their yearly average bill will increase to £1,960.

Paying with cash and cheque every three months result in a higher payment amount than those who utilise other means. In January, they will usually get a charge of £2,058, which is around £130 more a year than if they had paid via direct debit.

Enduring fees

The announcement from Ofgem includes a ceiling on standing charges, which are fixed daily fees that cover the cost of connecting to a supply.

Anger has been directed against the growing fees and the incapacity of customers to lower their payments. Ofgem has requested public input as part of a study it initiated into these charges.

Customers' home location affects the charges, but for this portion of their bill, the amount of energy they consume is unimportant.

Over the past two years, the fee has increased in the majority of locations. A normal home will pay 30p per day for gas and 53p per day for electricity in January.

(Sources: bbc.co.uk, ofgem.gov.uk)