Energy bills will rise again from January 1 after Ofgem announced a 1.2% increase to its energy price cap.

The regulator said the increase would see the typical bill for a household in England, Scotland and Wales increasing from £1,717 to £1,738-a-year, or by around £1.75-a-month.

It follows the price rising by 10% in October.

The cap does not set the maximum a household will pay for their energy but limits the amount providers can charge them per unit of gas or electricity, so those who use more energy will pay more.

Tim Jarvis, director general of markets at Ofgem, said: “While today’s change means the cap has remained relatively stable, we understand that the cost of energy remains a challenge for too many households. However, with more tariffs coming into the market, there are ways for customers to bring their bill down so please shop around and look at all the options.

“Our reliance on volatile international markets – which are affected by factors such as events in Russia and the Middle East – means the cost of energy will continue to fluctuate. So it’s more important than ever to stay focused on building a renewable, home-grown energy system to bring costs down and give households stability.

“In the short-term though, anyone struggling with bills should speak to their supplier to make sure they’re getting the help they need and look around to make sure they’re on the best, most affordable deal for them.”

Ofgem urged customers to take advantage of increasing choice among suppliers and look for the best deal to help keep their bills down, saying households could save up to £140.

Simon Francis, of the End Fuel Poverty Coalition said: ““As the temperatures plummet, a fourth winter of the energy bills crisis looms large in people’s minds.

“The decision to introduce a price cap change in the middle of winter was taken by Ofgem in 2022 and was described as an inhumane policy at the time. No wonder it has been opposed by campaigners ever since as households will have to find more money to keep themselves warm at the worst possible time.

“Already the average household will have paid around £2,500 extra for their energy than had we not been so exposed to volatile energy markets.”

Caroline Simpson, a spokesperson for Warm This Winter, added: ““It’s freezing this week and now we have another price cap rise which is devastating to the 6.5 million in fuel poverty and all of us who will be paying 66 percent more on energy than we did before the start of the  energy crisis.

“We desperately need to get on with the job of  ramping up our supply of homegrown, renewable energy, which is abundantly available to us on this windy island and a properly funded programme of insulation and ventilation to upgrade our leaky homes.

“At the moment we’re too heavily dependent on volatile oil and gas, which is sold on international markets and at the whim of global factors over which we have no control with billionaires such as Putin and Trump pulling all the strings and making us vulnerable to more energy shocks in the future.

“Homegrown renewables are the only way we will cut our bills for good but whilst that kicks in we also need commitment from the government that vulnerable households will be supported with their energy bills this winter and next with a social tariff funded by the energy sector's vast profits. In this day and age, nobody should be afraid to turn on the heating because they can't afford to pay for it.”

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The latest price cap is 10% or £190 lower than a year earlier, and 57.2% or £2,321 less than during the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022.

But it comes as millions of pensioners are facing a winter with less support, after the new Government decided to scrap winter fuel payments for those who do not receive pension credit or other benefits.

About 10 million pensioners will miss out on the payments of up to £300 this year.

Caroline Abrahams, charity director at Age UK, said: “Older people, struggling without their winter fuel payment, who were praying for a reduction in energy prices to help them in the New Year, will be bitterly disappointed today.

“The news that the energy price cap is instead slightly rising is the latest in a series of blows for pensioners living on a low or modest income, who do not receive Pension Credit because they don’t claim it or are not eligible.

“There are millions of older people in this situation and we know that many are hoping against hope that something will turn up to help ease their situation over the next few months, when the weather is at its coldest.

“If you are an older person for whom every penny counts, managing your energy bills until the rise in your State Pension starts coming through from April just got harder.”