Energy bills to increase by £60 a year on average from October
The regulator said the price cap will rise by four per cent – the equivalent of £5 per month – to £1,723 for the average household using both electricity and gas if this level was sustained for a year.
Energy bills are set to increase by an average of £60 a year in the run up to winter, after Ofgem announced its new price cap.
The regulator said the cap will rise by four per cent – the equivalent of £5 per month – to £1,723 for the average household using both electricity and gas if this level was sustained for a year.
This does not mean no one will pay over £1,723 because the cap is not the maximum bill for each household.
What each household actually pays depends on how much energy it uses, where it lives, its tariff and how it pays.
The cap instead limits how much suppliers can charge customers on default tariffs.
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.”
Currently, about 35 per cent of household energy accounts – or 11 million – are on fixed tariffs and therefore unaffected by the rising price cap.
Ofgem said households could make savings by choosing a fixed tariff, which are available at £100 or more below the October price cap.
Experts recommend looking for deals that are cheaper than the price cap, not longer than 12 months and without significant exit fees.
People can use websites to compare gas and electricity unit rates and standing charges in their region, from a range of suppliers.
Price comparison site Uswitch said there are currently 17 fixed deals available that are below the new October price cap, with the cheapest about 10 per cent lower.
Energy Secretary Miatta Fahnbulleh said: “Families will be understandably concerned about the cost of energy bills this winter, which is being driven up by the Iran war.
“Energy is an everyday essential and it needs to be affordable for everyone, which is why we have cut VAT on electricity bills from October, to give families some breathing space.
“This has limited the rise in the price cap and follows the £150 in costs we removed from bills earlier this year, and we will keep looking at what more we can do to protect families from unaffordable bills.”
SNP Westminster Leader Dave Doogan said: "Just one month into the job and Andy Burnham has already broken his promise to cut the cost of living - as household bills soar on his watch in Broken Brexit Britain.
"Energy bills have risen seven times under this Labour government. They are now a whacking £563 higher than the Labour Party promised during the election and, instead of reducing the cost of living, like he pledged, Andy Burnham is presiding over yet another big hike in prices.
"It's no wonder the Prime Minister ended his cost of living 'listening' tour early and failed to stop off in Scotland. People don't want to be used for Andy Burnham's TikTok content while their bills rise to a three-year high - they want money in their pockets and urgent help now.”
Unfortunately, early predictions suggest bills are going to rise by even more next year.
Analysts Cornwall Insight’s first forecast for January to March puts the cap at £1,872 a year, up 9% on October’s level.
This would mean households could face a bigger squeeze on budgets as the colder weather arrives.
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