Households across Great Britain are set to learn on Wednesday how much their energy bills will rise this winter, with forecasts indicating a 4% increase in the Ofgem price cap. The regulator will announce the cap for October to December, and analysts at Cornwall Insight predict a typical household will face an annual bill of £1,729, up from £1,663 under Ofgem's updated definition of a typical consumer. Under the previous calculation method, the equivalent would be £1,941 per year, up from £1,862. This would mark the highest average bill since July 2023, according to the consultancy.
The predicted rise is driven by continued uncertainty linked to the Middle East conflict, which has pushed wholesale energy prices higher, as reported by multiple outlets including LBC, Liverpool Echo, and Evening Standard. Heatwaves across Europe have added further pressure by increasing gas demand for power generation to meet air conditioning and cooling demand. These factors have more than offset the proposed removal of VAT on household electricity bills—a policy the Prime Minister said would knock about £45 off the annual cap. Cornwall Insight noted that the swing in global energy prices has outweighed the VAT impact.
The increased cap will come into force as households begin using more heating, adding to bills during the colder months. Cornwall Insight also expects bills to rise again in January based on current market prices, though this could change depending on developments in the Middle East, a forecast carried by The Guardian.
Craig Lowrey, principal consultant at Cornwall Insight, told The Guardian: "It is a stark reminder that our energy bills remain tied to events thousands of miles away. Moments like this are the strongest argument for reducing Britain's reliance on volatile international gas." He added that while temporary relief like VAT cuts help soften the blow, they don't address Britain's heavy dependence on imported natural gas, leaving the country exposed to global market risks.
The rising costs have prompted calls for more government support. Energy UK, the body representing energy suppliers, said the government should step in to help households most in need. The organisation highlighted that some people require "emergency support" over and above the existing £150 Warm Home Discount, and that bills are unaffordable for millions, necessitating a "better targeted and more agile" support scheme. Energy UK chief executive Dhara Vyas said: "Suppliers continue to do all they can to help their customers but as well as persistently high bills, record levels of debt show how the current system is failing to provide the right support to those in need." She called for a new "social discount" scheme that would result in "a system that works better for everyone."
Vyas also told LBC and other outlets: "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."
Energy UK's concerns are underscored by Ofgem's report at the end of last winter that customers owed suppliers a record £4.7bn. Since then, wholesale prices have risen further, following the start of the Iran war in February, according to BBC reporting.
The current Warm Home Discount reaches six million customers, but Energy UK argues that another 2.5 million need help. The organisation has proposed a new scheme costing £1.9bn—nearly double the current budget—that could offer £450 to some households. This could be part-funded through bills or shifted to taxpayers via government funding, as reported by the BBC.
Adam Scorer, chief executive of National Energy Action, welcomed the approach, saying it was what his charity had been calling for. He noted that the Warm Home Discount has risen by only £10 over the last decade. "We desperately need a new approach," Scorer told the BBC.
The last time the price cap reached a similar level was July 2023, still below the peaks seen after Russia's invasion of Ukraine. During that earlier spike, the Conservative government committed around £40bn of government spending to support households. Now, a government spokesman was quoted by LBC and other outlets as saying: "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."
Analysts have also estimated that electricity rates will rise from 26.11p per kilowatt-hour to 26.57p, and gas charges from 7.33p to 7.90p for households paying by direct debit, according to Cornwall Insight figures reported by The Guardian. Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, told The Guardian that to many households this will feel like a horrible reminder of the first gas crisis after Russia invaded Ukraine. She said the UK's reliance on gas for home heating was "a particular concern" as heat pump sales lag behind European neighbours.
Perspectives
Energy UK (energy suppliers' body): Urges the government to provide more targeted and permanent support for households, including a proposed "social discount" scheme costing £1.9bn, to replace what it calls stop-gap measures.
Government: Says tackling the cost of living remains a key priority and acknowledges families will be worried by higher bills, while pointing to measures like the Warm Home Discount and a warm homes plan.
Cornwall Insight (energy consultancy): Highlights that the price rise is driven by global gas market volatility and argues for reducing Britain's reliance on international gas to avoid future price shocks.
National Energy Action (fuel poverty charity): Supports Energy UK's call for a new approach, noting that the Warm Home Discount has increased only £10 in a decade.
Energy and Climate Intelligence Unit: Expresses concern about UK's dependence on gas for heating and lagging heat pump adoption, framing the price rise as a reminder of the need for a clean energy transition.