Household energy bills to rise for winter as Ofgem lifts price cap

The average household energy bill is to increase by £149 from October after Ofgem said it was increasing its price cap as homes approach the winter months.

The regulator announced it is hiking its price cap by 10% from the current £1,568 for a typical household in England, Scotland and Wales to £1,717.

It is around £117 cheaper than the cap in October last year, which was £1,834.

Ofgem said rising prices in the international energy market, due to heightened political tensions and extreme weather events, were the main driver behind the decision.

It means households will be going into the colder months facing higher bills than since April when the cap was lowered.

Millions of pensioners are also facing a winter with less support after the new Government decided to scrap winter fuel payments for those who do not receive pension credits or other benefits.

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

Jonathan Brearley, chief executive of Ofgem, said: “We know that this rise in the price cap is going to be extremely difficult for many households.

“Anyone who is struggling to pay their bill should make sure they have access to all the benefits they are entitled to, particularly pension credit, and contact their energy company for further help and support.”

He also urged consumers to “shop around” and consider a fixed-rate tariff that could save money.

“We are working with Government, suppliers, charities and consumer groups to do everything we can to support customers, including longer term standing charge reform, and steps to tackle debt and affordability,” he added.

The price cap sets a maximum price that energy suppliers can charge consumers for each kilowatt hour (kWh) of energy they use.

It does not limit total bills because householders still pay for the amount of energy they consume.

The figures provided by Ofgem indicate what a household using gas and electricity, and paying by direct debit, can expect to pay if their energy use is typical.

From October 1, households on a standard variable tariff that pay for their electricity by direct debit will pay on average 24.5p per unit, with a standing charge of 60.99p per day. For gas, the average will be 6.24p per unit with a standing charge of 31.66p per day.

Gillian Cooper, director of energy at Citizens Advice, said: “We’ve braced ourselves for a challenging winter but today’s price cap increase will no doubt see even more people fall behind on their energy bills.

“We’re particularly concerned about households with children and young people and those on lower incomes, who are most likely to struggle with their heating costs.

“Energy bills will now be around two-thirds higher than before the crisis, and with record levels of energy debt and the removal of previous support, people are in desperate need.”

October’s price cap will be significantly lower than during the peak of the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022, driving up costs in an already-turbulent market.

However, experts think there is likely to be a further increase in January, with more rises possible early in the new year due to escalating tensions in the Russia-Ukraine war.

Energy Secretary Ed Miliband said the announcement “will be deeply worrying news for many families”.

He blamed the price cap hike on the “failed energy policy we inherited, which has left our country at the mercy of international gas markets controlled by dictators”.

“We will also do everything in our power to protect billpayers, including by reforming the regulator to make it a strong consumer champion, working to make standing charges fairer, and a proper Warm Homes Plan to save families money.”