Households will pay more on their energy bills from October after regulator Ofgem raised its price cap by 4% to a three-year high.
The regulator said the price cap will rise by £60 per year – or £5 per month – to £1,723 for the average household using both electricity and gas if this level was sustained for a year. It means, in short, that the average annual energy bills will rise by £60 for a typical household in October.
How the cap works
Ofgem's price cap, set every three months, puts a limit on how much suppliers can charge per unit of energy, so homes that use high amounts of energy will pay more than the typical figure announced, and households which use less energy should pay less.
October's price cap will cover the period from 1 October to the end of this year. The next cap, covering 1 January 2027 to 31 March 2027, is due to be announced on 25 November.
Why prices are rising
Ofgem said the increase reflected higher wholesale gas prices as a result of the ongoing conflict in the Middle East, with volatile global markets remaining the dominant driver of price changes.
Neil Kenward, Ofgem’s 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.
“Savings are available by choosing a fixed tariff, which are available at £100 or more below the October price cap, and many suppliers offer tariffs with cheaper electricity to smart meter customers for electricity consumed out of peak times.
“It’s also worth considering different payment methods, with prepayment customers paying the lowest price cap rates, and could save consumers an average of about £45 compared to direct debit.”
