Energy price cap to increase by 10% from October, Ofgem says

Ofgem said rising prices in the international energy market was due to heightened political tensions and extreme weather events, ITV News social affairs correspondent Sarah Corker reports

The average household energy bill is to increase by 10% from October after Ofgem said it was increasing its price cap as households approach the winter months.

The regulator announced it is hiking its price cap from the current £1,568 for a typical household in England, Scotland and Wales to £1,717, adding around £12 a month to an average bill.

However, it is around £117 cheaper than the cap in October last year, which was set at £1,834.

Ofgem said rising prices in the international energy market, due to heightened political tensions and extreme weather events, was the main driver behind the decision.

Jonathan Brearley, the chief executive of Ofgem, said: “We know that this rise in the price cap is going to be extremely difficult for many households

The Ofgem chief executive said anyone who is struggling to pay their bill "should make sure they have access to all the benefits they are entitled to"

He also urged consumers to “shop around” and consider opting for a fixed-rate tariff that could save people money.

Energy Secretary Ed Miliband said Ofgem’s announcement that its energy price cap will increase by 10% was “worrying” for many people.

“The only solution to get bills down and greater energy independence is the Government’s mission for clean, homegrown power. That’s why we have hit the ground running, lifting the onshore wind ban, consenting unprecedented amounts of solar power and setting the largest-ever budget for our renewables auction.

“We will also do everything in our power to protect billpayers, including by reforming the regulator to make it a strong consumer champion, working to make standing charges fairer, and a proper Warm Homes Plan to save families money.”

Claire Coutinho MP, Shadow Energy Secretary said: “Instead of prioritising cheap energy, the new Labour Government are pursuing Ed Miliband’s reckless net zero targets with no thoughts to the costs.

“And far from their promise of saving families £300 off their energy bills, one of their first acts in office is to remove the Winter Fuel Payment from 10 million pensioners this winter.

“Because they weren’t honest about their plans that means millions of pensioners will have made no plans to deal with higher energy bills this winter.”

Ofgem's figures show what a typical household paying by direct debit can expect to spend on gas and electricity.

Mr Miliband called the rise in the price cap "a direct result of the failed energy policy we inherited"

What is an energy price cap?

The price cap was first introduced by energy regulator Ofgem on 1 January, 2019.

It is intended to protect against overcharging by limiting the amount that suppliers can charge for each unit of gas and electricity - measured in kWh (kilowatt hours).

A price cap does not mean a cap on your total energy bill. It is a cap on how much suppliers can charge for each kWh of energy used, together with a maximum daily standing charge.

Your bill will go up or down depending on how many units (i.e. how much energy) you use.

The standing charge covers the cost of supplying your home with gas and electricity. You pay a fixed daily amount for this, regardless of how much energy you use - and even if you're not home.

Suppliers can't charge more than the price cap, although they may charge less.

The energy price cap is updated every three months.

This means households could face higher bills this winter compared to the lower rates they have had since April when the price cap was reduced.

Up to a quarter of the UK population fear they may have to turn off their heating and hot water this winter due to the energy bill rise, a survey by Citizens Advice found.

More than 30% of households with children and 39% of low-income individuals are expected to take such drastic action.

Citizens Advice urged the government to "act fast" to prevent millions of households from experiencing further hardship this winter, with those in “desperate need” unable to wait for Labour’s long-term goal of reducing costs through a greater focus on renewables.

Average bills are still much lower than at the height of the energy crisis, which surged after Russia invaded Ukraine in February 2022, further disrupting an already unstable energy market.

The new Government decided to stop winter fuel payments for those who are not in receipt of pension credits or other means-tested benefits.

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