Energy bills are set to rise again this winter, with the typical direct debit household facing an increase from £1,663 to £1,723 a year from October. The Ofgem price cap is rising by 4%, marking the highest energy bills in three years.
Why bills are climbing
Bills had already increased by 13% in July, driven by continued conflict in the Middle East. Analysts have warned that prices could rise further in January, when the price cap is next updated.
Cornwall Insight is forecasting a further 9% rise in the new year, which would push the average January bill to £1,872 a year.
What the experts say
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: “Where January bills land will depend on whether the situation in the Middle East calms down in the next couple of months.
“However, even if we saw an end to the conflict, lower stocks going into winter as demand increases mean falling bills in January is unlikely.”
Neil Kenward, Ofgem Director General for Markets, said: “High international gas prices are continuing to drive energy costs in the UK. We welcome the Government’s intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter.”
How the price cap works
The price cap applies to standard variable rate (SVR) tariffs, the default tariff for households not fixed into an energy deal. An estimated 22 million people are covered by the cap.
The cap does not limit total spend; it sets maximum unit rates for gas and electricity plus daily standing charges. Bills still depend on actual usage, so they can be higher or lower than the cap figure.
The main cap figure represents what a typical billpayer on direct debit can expect to pay over a year, updated every three months. Different unit rates and standing charges apply to prepayment customers and those who pay on receipt of a bill.
