- The price of gas and electricity will now rise over the colder winter months
- The news comes as a blow to pensioners already losing Winter Fuel Payments
Energy bills will rise 10 per cent in October, regulator Ofgem has confirmed – or £149 more a year.
The average home currently pays energy bills of £1,568 a year, with prices limited by the Ofgem price cap.
But this will rise to £1,717 from 1 October, Ofgem said on Friday.
Rising energy bills are a blow to hundreds of thousands of pensioners, who will no longer get Winter Fuel Payments worth up to £300 a year due to chancellor Rachel Reeves’ sweeping cutbacks.
Energy bills are rising because of the increasing cost of wholesale energy – the gas and electricity bought by energy firms that then sell onto consumers.
Frozen out: Energy bill rise comes as colder weather sets in and homes begin to need heating
The current price cap sets the energy bills paid by more than 80 per cent of UK homes, though the exact amount varies depending on gas and electricity use.
The headline price cap figure applies to households on variable-rate tariff energy deals paying by direct debit.
The October average price cap will run for three months until it is reset again in January 2025.
Why is the Ofgem price cap so important?
The price cap was brought in during January 2019 to stop energy firms overcharging customers on variable-rate tariffs.
Most households had fixed-rate energy deals at the time, and only moved onto variable-rate tariffs if they did not renew at the end of their term.
But after energy bills began rising in late 2021, gas and electricity companies responded by pulling all new fixed-rate deals from the market.
They did this to try to avoid the widespread collapse that affected many energy firms, which were suddenly being forced to sell power for far less than it cost them to buy it.
Because cheap fixed-rate deals had almost disappeared, almost all homes ended up on variable tariffs regulated by the Ofgem price cap.
What happens to energy bills in 2025?
Ofgem never makes predictions about the future of its price cap.
But sadly, it looks like the only way is up.
Analysts at Cornwall Insight said there would be a ‘further modest increase’ to energy bills when the price cap changes again in January 2025.
Cornwall Insight has correctly predicted the direction of all price cap changes since energy prices became volatile in late 2021.
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