Ofgem has confirmed the energy price cap will rise by 4 per cent from October 1, pushing up annual bills for millions of households across Great Britain.
The new price cap, which will be in place until December 31, means a typical household on the standard tariff paying by direct debit for gas and electricity will see annual bills rise from £1,663 to £1,723. This amounts to an additional £60 over the year ahead, some £5 a month.
Ofgem changed the way it measures average household energy use from July, reflecting the fact people are now using less gas and electricity than in previous years.
Reasons for the rise
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.”
Government response
The increased October cap, which will remain in place for three months, will come into force as households start to increase their energy usage further by using their heating more regularly, adding to bills.
Last week, a Government spokesman said: “Tackling the cost of living remains a key priority for this Government and we know families will be worried by the prospect of higher energy bills this winter.
“We’re acting to give consumers breathing space with the cost of living – cutting VAT on energy bills, ensuring around six million households get the £150 warm home discount this winter, and making millions of homes cheaper to run through our warm homes plan.
“Alongside our efforts to support rapid de-escalation in the Middle East, we will do everything we can to shield consumers from global energy shocks and bring down bills for good.”
Industry calls for targeted support
Energy UK’s chief executive Dhara Vyas said more targeted support is still needed to help households facing further costs.
She said: “Too many households continue to feel the strain of high energy bills.
“Instead of relying on stop-gap, ad hoc or emergency measures, we need a better, targeted and more permanent way to give people confidence that they’ll get help when they most need it.
“The current arrangements fail to provide the help needed and work out more costly.
“Household energy prices are set to increase further for British households.”
