Energy bills are rising for millions of households in England, Scotland, and Wales as the new year begins, following a slight increase in the energy price cap by Ofgem. Prices for those on variable tariffs are rising by 0.2% from now, which equates to a 3% annual increase for a household using a typical amount of gas and electricity, according to Ofgem.

The regulator's energy price cap sets the maximum price for each unit of gas and electricity for those on variable tariffs. It does not cap the total bill, meaning that those who use more energy pay more. Ofgem illustrates the cap with a household using a "typical" amount of 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. This household would see a 3 rise in its annual bill, from 1,755 to 1,758.

Campaigners have expressed concern that this increase, though small, coincides with the coldest period of the year, potentially leading to another winter of high energy prices for billpayers. However, changes announced in the Budget are expected to bring a fall in the cost of energy from April.

Kevin Peachey, cost of living correspondent, reported that the amount of energy used varies significantly from household to household. This means the impact of the price cap will differ depending on individual consumption patterns.

Ofgem's role as the regulator is to protect consumers and ensure fair pricing within the energy market. The price cap is one mechanism used to achieve this, particularly for those on variable tariffs who are often considered more vulnerable to price fluctuations.

The upcoming changes announced in the Budget represent the next significant development in energy pricing. The details of these changes and their potential impact on household bills will be closely watched by consumers and energy providers alike.