Millions of households will face higher energy bills this winter as Ofgem has revealed an increase in the price cap by 2% starting from October. This adjustment means that for every £100 spent on gas and electricity, the bill will now amount to £102, surpassing initial expectations of a 1% rise.
According to Ofgem, the average dual fuel household paying through direct debit will witness an annual energy bill surge from £1,720 to £1,755. Similarly, individuals paying via pre-payment meters will experience an increase from £1,672 to £1,707 yearly, while those paying upon receipt of the bill will see their charges go up from £1,855 to £1,890.
It is essential to note that while there is a price cap on unit rates and standing charges for gas and electricity, there is no limit on the total energy bill. Standing charges, which are fixed daily fees for network connection, are applicable regardless of energy consumption. The price cap undergoes revisions every three months – in January, April, July, and October.
The updated price cap will take effect on October 1 and remain in place until December 31, subject to further adjustments by Ofgem. The significant increase in the price cap is attributed to changes in network costs and the expansion of the Warm Home Discount scheme, offering eligible households a £150 deduction on their winter energy bills.
Officials from Ofgem and the Energy Ministry highlighted ongoing efforts to stabilize the energy market and reduce consumer expenses through fixed tariffs and alternative payment methods. They emphasized the necessity of transitioning towards sustainable energy sources to mitigate the impact of fluctuating international gas prices on domestic bills.
In terms of the price cap specifics, the average unit rate for electricity is rising from 25.73p to 26.35p per kilowatt-hour, with the corresponding daily standing charge increasing from 51.37p to 53.68p. Conversely, the gas unit rate is decreasing from 6.33p to 6.29p per kilowatt-hour, while the daily standing charge is rising from 29.82p to 34.03p.
Consumers on standard variable rate energy tariffs fall under the protection of the Ofgem price cap, encompassing a substantial portion of households across England, Wales, and Scotland. Ofgem’s continuous monitoring and assessment of wholesale energy prices and additional cost components aim to regulate and stabilize energy expenses for consumers.
Looking ahead, Ofgem plans to announce the January price cap by November 27, 2025, with industry experts forecasting potential adjustments based on various factors such as geopolitical developments and policy changes. Stay informed on money-saving tips and exclusive offers by subscribing to the Mirror Money newsletter.