Millions of households across England, Scotland, and Wales are preparing for an increase in energy bills this winter following Ofgem’s latest decision to raise the energy price cap by 2% in October. This rise exceeds previous expectations of a 1% increase, resulting in higher costs for families during the colder months.
For the average dual-fuel household paying by direct debit, the annual energy bill will increase from £1,720 to £1,755. Customers using prepayment meters will see their bills rise from £1,672 to £1,707, while those who pay their bills upon receipt will face an increase from £1,855 to £1,890.
It’s important to note that the price cap sets limits on unit rates and standing charges but is not a total cap on energy bills. Ofgem reviews the cap every three months, which means prices may shift again in January.
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Standing charges—which consumers pay daily regardless of energy usage—will also rise. The electricity standing charge will climb from 51.37p to 53.68p per day, and the gas standing charge from 29.82p to 34.03p per day. Meanwhile, the electricity unit rate will rise slightly from 25.73p to 26.35p per kWh. Gas unit rates, in contrast, are set to decrease marginally from 6.33p to 6.29p per kWh.
Ofgem attributes the unexpected increase largely to higher network costs and the expansion of the Warm Home Discount scheme, which offers eligible households a £150 discount on their winter energy bills.
Tim Jarvis, Ofgem’s Director General for Markets, commented: “While this change is below inflation, we recognize customers may still feel the impact. To save money, consider switching to a fixed tariff, which could reduce costs by more than £200 compared to the new cap. Paying by direct debit or using smart pay-as-you-go options can also lead to savings.”
Jarvis also highlighted the ongoing vulnerability of energy prices to volatile international gas markets. “That’s why we continue working with government and industry to diversify the energy mix and reduce dependence on markets beyond our control,” he said.
Energy Minister Michael Shanks emphasized the cost of fossil fuel reliance: “Wholesale gas prices remain 75% higher than before Russia’s invasion of Ukraine. Families, businesses, and the economy are paying the fossil fuel penalty. Britain’s solution lies in moving away from fossil fuels to clean, homegrown energy.”
Approximately 34 million people are covered by the cap, including 20 million paying by direct debit, 8 million using prepayment meters, and 6 million paying on receipt of bills. Ofgem estimates around 20 million households are on fixed tariffs, some of which could save more than £200 compared to the new cap.
Energy consultancy Cornwall Insight predicts the cap could fall again in January, potentially to around £1,712 for a typical direct debit household. However, this depends on factors like global energy prices, weather, and government policies.
The increase in energy bills raises questions about affordability and protections for households. Are you concerned about rising energy costs this winter? Should measures be taken to hold the price cap steady to protect families? Share your thoughts in our comments section.