Ofgem has confirmed its energy price cap will rise by 4 percent from October, taking the typical annual bill to £1,723. Higher wholesale gas prices are the main driver, softened by a VAT cut on electricity.
Millions of British households face another increase in their energy bills this autumn. The regulator Ofgem has confirmed that its price cap will rise by 4 per cent from the start of October, adding to the pressure on family budgets.
The change takes effect just as the weather turns colder and demand for heating begins to climb. For many homes, it means the cost of staying warm through the coming winter will be noticeably higher than it was a year ago.
What the new cap means
According to Ofgem, the price cap for a typical household paying by direct debit will rise from £1,663 a year to £1,723. That works out at an increase of roughly £60 over the course of a year, or around £5 a month.
It is worth remembering what the figure actually represents. The cap does not limit the total any home can be charged, but sets a ceiling on the unit price of gas and electricity, so bills still depend on how much energy each household uses.
The new level applies to the period running from the first of October to the end of December. Ofgem reviews and updates the cap every three months, which means it could well change again when the new year arrives.
Gas is the main driver
The increase is not spread evenly across both fuels. Ofgem says that gas bills are set to rise by around 8 per cent, while electricity costs are expected to remain broadly stable over the same three month period.
As a result, households that lean heavily on gas for heating and hot water will feel the change most sharply. Those without a gas supply, by contrast, should see an increase of less than 1 per cent on their bills.
Behind the rise sit higher wholesale gas prices on international markets. Ofgem points to global tensions, including conflict in the Middle East, as a key reason why the cost of gas has been pushed upward once again.
The role of a VAT change
There is one factor working in consumers' favour. The government has removed value added tax from domestic electricity bills, a move that Ofgem says has prevented roughly £45 in extra costs from landing on households this quarter.
Without that intervention, the overall increase would have been steeper. It also helps explain why electricity charges are staying broadly flat even as wholesale prices climb, softening the blow for a great many families across the country.
How many are affected
The cap reaches a wide swathe of the country. Around 22 million households on default, or standard variable, tariffs are covered by the new level and will see the change reflected in their bills from the start of October.
Not everyone is affected in the same way, however. Roughly 11 million households that have locked in a fixed tariff will not see any immediate change, as their rates have been agreed in advance for a set period of time.
What households can do
For those worried about the rise, there are still some practical options. Comparing fixed deals, submitting regular meter readings and checking eligibility for support schemes are among the steps often recommended by consumer groups.
Neil Kenward, a director general at Ofgem, said that high international gas prices were continuing to drive energy costs in the UK, while welcoming the government's decision to remove value added tax from electricity bills.
For many households, the message is a familiar one as another winter draws closer. Energy remains expensive, and while the latest rise is modest next to past shocks, it arrives at a time when budgets are already stretched thin.
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