Households set to learn how energy bills will change as Middle East conflict continues to hike prices

Regulator 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.

Analysts said the predicted increase is driven by continued uncertainty linked to the Middle East conflict, which has pushed wholesale energy prices higher.

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The ongoing heatwaves across Europe have also added further pressure by increasing gas demand for power generation to meet air conditioning and cooling demand.

Experts at Cornwall Insight predicted this week that a typical household will face an annual bill of £1,729, up from £1,663, based on Ofgem’s updated definition of a typical consumer, marking the highest average bill since July 2023.

The increased October cap will come into force as households start to increase their energy usage further by using their heating more regularly, adding to bills.

However, 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, the Prime Minister said after announcing the measure.

Earlier this 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."

However, Energy UK’s chief executive, Dhara Vyas, said more targeted support is still needed to help households facing further costs.

She said: "Too many households continue to feel the strain of high energy bills. Instead of relying on stop-gap, ad hoc or emergency measures, we need a better, targeted and more permanent way to give people confidence that they’ll get help when they most need it."