Energy bills to rise for milions as regulator Ofgem announces 4% increase from October

Households are bracing for a winter squeeze from energy bills as regulator Ofgem raised the price cap to a three-year high on Wednesday.

Analysts are expecting household bills to increase after the Middle East conflict affected wholesale prices.

Ofgem will on Wednesday reveal the level of the annual energy price cap for the three months from October to December for a typical household using gas and electricity in England, Scotland and Wales.

Forecasts have indicated that households will see their bills rise by another 4% in the latest hike this year.

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The rise marks the highest average bill since July 2023.

The increased October cap, which will remain in place for three months, will come into force as households start to increase their energy usage further by using their heating more regularly, adding to bills.

Speaking to LBC's Tom Swarbrick on Wednesday morning, Energy Secretary Miatta Fahnbulleh said Brits are seeing their bills surge due to global price rises in oil and gas, which the UK still depends on.

"One of the challenges that we have is that we are uniquely exposed to global fossil fuel markets. That's why we're seeing the rise in prices this winter because of that war in the Middle East, and we have got to break that dependency," she said.

"If we think about the last 5 years and the times that families have been under massive pressure with their energy bills. It was a consequence of the war in Ukraine. It's a consequence of the war in the Middle East."

She added: "We've got to decouple ourselves from those markets and our drive for homegrown clean energy is absolutely central to that."

Cornwall said the expected increase in October will be less than otherwise expected because of the proposed removal of VAT from household electricity bills.

This policy would knock about £45 off the annual Ofgem price cap from October, Prime Minister Andy Burnham said after announcing the measure.

Last week, a Government spokesman said: “Tackling the cost of living remains a key priority for this Government and we know families will be worried by the prospect of higher energy bills this winter.

“We’re acting to give consumers breathing space with the cost of living – cutting VAT on energy bills, ensuring around six million households get the £150 warm home discount this winter, and making millions of homes cheaper to run through our warm homes plan.

“Alongside our efforts to support rapid de-escalation in the Middle East, we will do everything we can to shield consumers from global energy shocks and bring down bills for good.”

This is going to be another difficult winter,” warns Uswitch, as Ofgem announces October price cap level

Richard Neudegg, director of regulation at Uswitch, said: “This is going to be another difficult winter. For price cap customers, gas costs will be almost 27% higher than the same period last year, with the increase hitting just as the heating is due to go on.

“The Middle East conflict continues to impact wholesale gas prices, and ongoing supply challenges are set to hammer household bills as winter demand looms," Pippa Heylings MP, Liberal Democrat Spokesperson for Energy Security and Net Zero said.

“This latest rise in the price cap has wiped out the small savings from Andy Burnham’s cut of VAT on electricity bills, proving that continuity Starmerism will keep families stuck in a financial mire.

“The Prime Minister must wake up to the scale of the challenge and accept that bold change is needed to bring bills down.

“That should start with our radical plan for an Essential Energy Guarantee, taking profits from energy networks and using them to bring down costs on the essential energy used by households.

"We also need to fix the broken electricity market and decouple wholesale gas price from electricity so people can finally benefit from cheap, clean power”