The average household annual energy bill is set to soar to £3,549 from October after energy regulator Ofgem announced an increase in the price cap.
It's another devastating blow for families and individuals already having to deal with the soaring cost of heating and powering their homes, plus inflation of 10.1% which has pushed up prices in the shops.
And the 80.06% rise in the energy price cap is unlikely to be the last, with some predicting that from January, 2023, households will be paying an average of £4,101.74 until June and £5,054.53 from July to December. Forecasters have also suggested that inflation could hit 18.6% next year. You can follow live updates on the latest price cap changes here.
Read more: Martin Lewis gives raw and emotional interview as he issues price cap warning to everyone in UK
Around 24 million households in England, Scotland and Wales on default energy tariffs will be paying the new price cap on October 1, and it will remain in place until December 31, when it will be adjusted again.
The continued rise in global wholesale gas prices began to surge after the Covid pandemic, and has reached record levels thanks to Russia slowly switching off gas supplies to Europe.
Jonathan Brearley, Ofgem's chief executive urged the incoming Prime Minister and new Cabinet "to provide an additional and urgent response to continued surging energy prices", after talking of the hardship energy prices would cause when the weather grew colder.
To help you work out how much your bills might rise, we have created an "energy bill calculator". You can get more cost of living news and other story updates straight to your inbox by subscribing to our newsletters here.
Use our energy bill calculator to work out how much your gas and electricity cost could rise by
The calculator helps you estimate how much your energy bills will increase this October and in January, 2023. Simply enter your current monthly energy bill, and click "calculate".
The price cap isn’t actually a total cap on your energy bills. Instead, it sets a limit on the rates a supplier can charge for each unit price of electricity and gas you use. This means your bill still changes depending on how much energy you use. If you use more energy, you’ll pay more - or use less, and you’ll pay less. The price cap also sets a maximum for the daily standing charge, which is what you pay to have your home connected to the grid.
It's worth noting that this is just a rough guide - there are lots of variables that could impact your bill. For example, if you've built up a lot of "credit" in the summer months, then this could lower your direct debits. Or if you find you're using more or less energy, this will also affect how much you're paying."
What is the price cap and how is it set?
The "energy price cap" limits the maximum amount energy suppliers can charge you for each unit of gas and electricity you use and sets a maximum "daily standing charge" (what you pay to have your home connected to the grid). It does not limit how much your bills could be, just how much the suppliers can charge you for each unit you use. Inevitably, the more units of gas and electric you use, the higher your bill will be.
The price cap, set by the UK's independent regulator Ofgem, only applies to standard and default tariffs - it doesn't apply to people on fixed-term energy deals. Ofgem has changed its pricing reviews from twice a year to four times a year, citing a need to keep up with quick changes to wholesale energy prices, the biggest contributor to changes in the price cap.
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