Energy customers face a fresh blow as latest forecasts point to a 4% rise in bills in autumn. Energy market experts at Cornwall Insight have released their final prediction for Ofgem's upcoming price cap between October and December. According to their analysis, on a unit-for-unit basis, energy bills are set to rise to their highest level since July 2023.
Price cap forecast to rise to £1,729
Under Ofgem's updated usage measures introduced last month, Cornwall Insight forecasts the annual energy price cap to rise by £66 to £1,729. Under the old calculation, that figure jumps from £1,862 to £1,941. The cap does not limit total bills, because householders still pay for the amount of energy they consume.
The expected increase is being driven by ongoing uncertainty over the US-Iran conflict, with wholesale prices for the coming winter at their highest level in almost four years. The price increase comes despite Prime Minister Andy Burnham's July decision to remove VAT from household electricity bills from October, with wholesale market swings outweighing the VAT savings.
Experts warn of impact on struggling households
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Rising energy bills aren’t welcome at the best of times, but with winter approaching, this latest hike will hit struggling households especially hard. Driven by international conflict rather than domestic policy, it is a stark reminder that our energy bills remain tied to events thousands of miles away.”
He added: “Moments like this are the strongest argument for reducing Britain’s reliance on volatile international gas. While temporary relief like VAT cuts help soften the blow, they don’t touch the underlying fact that Britain is heavily dependent on imports of natural gas. As long as we’re exposed to global, the risk of these price shocks will remain.”
Uswitch urges households to act before October
Richard Neudegg, director of regulation at Uswitch.com, urged households to take action before October to reduce their bills. He said: “Households holding out for a last-minute reprieve on rising energy bills set to have their hopes dashed, with predictions suggesting a 4% increase in the October price cap. With continued instability in the Middle East, higher energy costs are now looking very likely throughout winter as a third consecutive price cap hike is predicted for January.
“Those still on price cap tariffs who don’t take action before October should brace themselves to pay even more for their heating, with standard gas prices likely to be a staggering 26% higher than they were last year. But there is an escape route. The best fixed deals on the market right now undercut this prediction by around 12%, with the cheapest priced at £1,522 for a typical home.
“Don’t suffer higher winter bills when you don’t have to – a decent fixed tariff beats these rates and protects you from further price rises. Every week spent on a standard tariff is another week paying higher rates than you need to.”
Ofgem's next announcement due August 26
Energy regulator Ofgem changes the price cap for households every three months, largely based on wholesale energy costs. The energy price cap was introduced by the Government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales 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. Ofgem is expected to make the next price cap announcement on or before Wednesday, August 26.
