UK households will be landed with higher bills this winter as the Ofgem price cap rises by 2 per cent.
The energy price cap will increase from 1 October for a typical household in England, Scotland and Wales, just as cooler temperatures see many switching on their central heating.
This means that the energy bill for the average household paying by direct debit for gas and electricity will rise from the current £1,720 to £1,755 per year.
Uswitch calculated that the average home on a standard tariff would spend £140 on energy in October compared with £63 in September, thanks to a combination of higher rates and increased usage in autumn.
The End Fuel Poverty Coalition said the latest increase represented a 2.21 per cent year-on-year rise and meant energy bills would be 68 per cent or £713 a year higher than in the winter of 2020-21.
The increase in energy costs come despite wholesale prices falling by 2 per cent over the three months prior to Ofgem’s latest price cap decision.
However, standing charges – the figure consumers pay per day to have energy supplied to their homes – are set to rise by 4 per cent for electricity and 14 per cent for gas, or 7p a day, primarily driven by the government’s expansion of the Warm Home Discount.
Around 2.7 million more low-income households, including 900,000 families with children, are eligible for the £150 Warm Home Discount this winter, after the Government confirmed it would remove the “hard to heat” eligibility criteria.
The government has said the change will see an estimated 6.1 million households receive the discount this winter.
Ofgem said the latest increase was also driven by an increase in electricity balancing costs – incurred by network operators to ensure a stable electricity supply for when there is both too much power and too little power in the system – adding around £1.23 a month to the average household bill.
It changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.
The energy price cap was introduced by the government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use.
It does not limit total bills because householders still pay for the amount of energy they consume.
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