Energy prices: price cap predications forecast UK bills going up in January - when will energy prices go down?

• Household energy bills are set to rise by 1% in January, increasing the average cost to £1,736 per year
• This comes after a 10% hike in October, dashing hopes for a decrease in energy costs this winter
• Cornwall Insight had initially predicted a drop in bills but now forecasts a slight increase instead
• Ofgem will announce the updated energy price cap for early 2025 on 22 November
• The price cap limits unit rates but not total bills, so costs depend on household energy usage

Hopes for a decrease in household energy bills appear to be dashed, with new forecasts indicating a rise at the beginning of next year.

According to energy consultancy Cornwall Insight, Ofgem is expected to announce on Friday (22 November) that the typical household energy bill will increase by 1%, or £19, bringing the average cost to £1,736 from the current £1,717 starting 1 January.

The prediction is a change from Cornwall Insight's earlier forecast of a 1% drop to £1,697, disappointing news after a 10% price increase in October.

Cornwall Insight said: “Given the price cap rise in October, many will have been hoping to see a fall in the cap for January. Unfortunately, forecasts show that prices will be staying relatively high for the remainder of winter.”

But what does it mean for households, and will energy prices ever come down? Here is everything you need to know.

What is the energy price cap?

The Government introduced the energy price cap in January 2019 to set a maximum price that energy suppliers can charge per kilowatt hour (kWh) of energy used in England, Scotland and Wales.

Ofgem updates the energy price cap for households every three months, mostly based on the cost of energy in wholesale markets. The regulator will announce the new cap for the first quarter of next year on 22 November.

What does the change mean for me?

The energy price cap does not limit total bills, because householders still pay for the amount of energy they consume.

The forecasted rise means that bills will stay relatively high throughout the winter, putting additional pressure on family budgets during the coldest months of the year.

The change means that the typical household energy bill will increase by 1%, or £19, bringing the average cost to £1,736 from the current £1,717 starting 1 January

Will energy prices ever go down?

While the cap is significantly lower than at the peak of the energy crisis - fuelled by Russia’s invasion of Ukraine in February 2022 - prices are still “very sensitive to global events” and supply concerns tied to geopolitical tensions, Cornwall Insight said.

Craig Lowrey, principal consultant at Cornwall Insight, said: “Supply concerns have kept the market as volatile as earlier in the year and additional charges have remained relatively stable, so prices have stayed flat.

“While we may have seen this coming, the news that prices will not drop from the rises in the autumn will still be disappointing to many as we move into the colder months.”

Prices are expected to fall slightly in both the second and fourth quarters of next year, but millions of pensioners are set to face a tougher winter, with the Government deciding to cut back winter fuel payments.

Lowry has called for the Government to help protect the vulnerable and tackle energy supply for the long-term, saying: “With it being widely accepted that high prices are here to stay, we need to see action.

“Options like social tariffs, adjustments to price caps, benefit restructuring or other targeted support for vulnerable households must be seriously considered.”

He added: “The Government needs to keep momentum on the transition while acknowledging that immediate support is essential for those struggling now.”

We’d love to hear your thoughts on this latest energy price update. How will the expected increase in bills impact your household budget this winter? Share your experiences, tips for saving energy or questions in the comments section.