Millions of households in Great Britain will face the highest energy charges in three years this winter after months of soaring market prices caused the government’s price cap to rise for a second time in three months.
Gas and electricity prices will rise by 4% from October under the new cap, months after climbing 13% at the start of July to take account of soaring global energy market prices caused by the war on Iran.
The energy regulator for Great Britain, Ofgem, said the new rate for about 22 million households was equivalent to £1,723 a year for a typical household’s gas and electricity use, compared with the rise to £1,663 for the July to September period.
Clare Moriarty, the chief executive of Citizens Advice, said: “It’s another sign of the relentless erosion of living standards across the country: energy bills are simply too high, prices leapfrog incomes, and debt levels continue to grow.”
As the bill rises in consecutive quarters the typical household will pay an extra £350 a year more than in 2024, when the Labour government came to power with a promise that it would cut bills by £300 a year by the end of the decade.
About a third of households that buy their energy via fixed rate deals will not be affected by the change in the energy cap.
Miatta Fahnbulleh, the energy secretary, said on Tuesday that she understood why people were worried and frustrated about energy bills and that the government was “doing everything we can to make them more affordable”.
In response to public questions on the Reddit social media platform, she said: “As a start, we removed VAT from electricity bills to give everyone some breathing space. This is on top of the £150 we removed from energy bills in the budget in April.”
The energy cost increase has reignited calls for the government to help vulnerable households. There have been repeated calls for the government to fund extra measures by raising the windfall taxes on profits made by energy companies and introduce a windfall tax on banks.
“It’s plain common sense,” said Paul Nowak, the TUC general secretary. “Banks are raking it in while many up and down the country are struggling to get by – they can well afford to pay more tax to ease the pressure on working people.”
The regulator calculated the average of £1,723 based on the estimated energy use of a typical household. Since July it has assumed lower annual energy use than in previous years because the high cost of energy has forced many households to use less gas and electricity. Under the previous calculations the price cap would have climbed to £1,940.69 from October.
From October, the unit rate for electricity will rise from 26.11p a kilowatt hour to 26.32p, while gas charges will rise from 7.33p to 7.97p. However, the actual household bill will depend on how much each consumes.
Energy standing charges, which are charged daily whether you use energy or not, will rise, too. The gas standing charge will climb from 29.04p a day to 29.68p a day, while the daily standing charge for electricity will rise from 57.19p to 54.83p. The rate for all these combined charges is a three-year high.
after newsletter promotion
More than a third of households have begun turning down the temperature on their washing machine and radiators in empty rooms since 2023, according to research commissioned by the End Fuel Poverty Coalition.
Meanwhile, when the weather is colder about a fifth of households have begun going to bed early to keep warm or heating only one room to save energy, the survey found.
Simon Francis, the coordinator of the End Fuel Poverty Coalition, said: “Some reduction of energy use could be a good thing, caused by better energy efficiency in people’s homes. But sadly, for many households, reductions in energy use have happened simply because people cannot afford to use as much energy as in the past.
“That means that some are demonstrating dangerous behaviours such as cutting back on washing and, for one in 10 members of the public, skipping hot meals to save on energy.”
The government’s clean power plan has come under criticism from the Conservative party, which has claimed that the network upgrades and market balancing costs needed to support a boom in renewable energy were contributing to the UK’s high electricity costs.
Fahnbulleh said: “More renewables will mean that that gas is setting the price less of the time. That’s why our drive to clean power is so important.”
