Energy bills for millions of UK households will rise after a 4% increase in the energy price cap.
Ofgem have announced that the cap will go up from £1,663 to £1,723 per year for a typical household paying by direct debit and using both gas and electricity. This represents an increase of £60 a year or around £5 a month, if the level were sustained for 12 months.
Under the new cap, electricity will cost an average of 26.32p per kWh, with a daily standing charge of 54.83p. Gas will cost 7.97p per kWh, with a daily standing charge of 29.68p.
It will apply from the 1st October to the 31st December 2026 and covers around 22 million households 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.”
Around 11 million households are on fixed tariffs and will not be directly affected by the increase this Autumn.
Despite the rise, Ofgem say that prices remain 52% below the peak of the 2022 energy crisis, when the government intervened to limit typical household bills to £2,500.
The regulator stressed that this year’s cap is not a limit on total bills, with the amount households actually pay depending on energy consumption, location and meter type.
Ofgem has urged households struggling with bills to contact their supplier, which can offer repayment plans, financial assistance and other support.
Ofgem says higher wholesale gas prices, driven by volatility in global markets linked to the ongoing conflict in the Middle East, are the main reason for the increase.
The next price cap, covering January to March 2027, is due to be announced on the 25th November.
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