New Ofgem energy price cap to be announced this week with bills forecast to rise

Energy Bills Set to Rise Again as Ofgem Prepares October Price Cap Announcement

Millions of households could see energy costs rise again from October, as the regulator Ofgem prepares to announce its latest price cap on Wednesday. The new cap, covering October to December, will set the maximum unit rates and standing charges suppliers can charge households on standard variable tariffs.

Energy analysts Cornwall Insight have issued their final forecast ahead of the announcement, predicting the typical annual bill will rise by around four per cent. Under Ofgem's revised definition of a typical household, the annual figure is expected to increase from £1,663 to £1,729 from October 1. Cornwall Insight noted that on a unit-for-unit basis, this would take household energy costs to their highest level since July 2023.

The change in Ofgem's Typical Domestic Consumption Values (TDCVs) – which now assume annual electricity use of 2,500kWh and gas use of 9,500kWh – does not reduce what households are actually charged. Under the previous consumption figures of 2,700kWh for electricity and 11,500kWh for gas, Cornwall Insight estimates the October cap would be equivalent to £1,941, up from the current £1,862. The price cap limits unit rates and standing charges rather than total bills, so households using more energy will pay more.

The forecast puts the average electricity unit rate from October at 26.57p per kWh, with a standing charge of around 55p per day. Gas is forecast at 7.90p per kWh, with an average standing charge of around 31p per day.

Cornwall Insight attributes the rise to continued uncertainty surrounding the US-Iran conflict, which has pushed wholesale prices for the coming winter to their highest level in almost four years. Ongoing heatwaves across Europe have also increased demand for gas-fired power generation for air conditioning, putting further pressure on energy markets. Disruption to global gas markets is affecting efforts to refill European gas storage facilities ahead of winter.

The analysts' current forecast points towards another increase in the price cap from January 1, though they stressed that wholesale markets remain volatile and the prediction is likely to change.

Households in Debt Face Deeper Arrears

Fresh data from free advice service Money Wellness shows that households already struggling with energy debt have seen their arrears deepen, despite falling energy prices. While the proportion of Money Wellness customers with energy debt has fallen from 58% in 2023 to 37% in 2026, those still in debt owe significantly more. The average amount owed has jumped 19% in three years, rising from £2,037 to £2,432.

Sebrina McCullough, director of external relations at Money Wellness, said: "The fact that fewer people are now turning to us with energy debt might sound like good news, but there is another story underneath the headline. The people who are still in energy debt owe more than they did three years ago, and they are much more likely to be vulnerable, out of work, supporting children and reliant on benefits."

The data also shows that energy debt affects 43% of Money Wellness customers citing a physical disability and 45% of those with mental health concerns. Among customers whose only income is from benefits, 43% have energy debt, compared with 32% of those with other income sources. Money Wellness says this indicates structural affordability problems rather than simply poor household budgeting.

Energy Ombudsman figures reveal a 16% increase in accepted cases, rising from 40,068 in the first half of 2025 to 46,532 in the same period of 2026. Ed Dodman, chief ombudsman for energy, said the findings highlight the continued challenges facing many energy consumers at a time of ongoing pressure on household finances.

Government and Industry Respond

A UK Government spokesman said: "The Government is acting to give consumers breathing space with the cost of living, including 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."

Dhara Vyas, chief executive of Energy UK, said more targeted and permanent support was needed for households struggling with energy costs. The rising forecasts come as winter approaches, a time when energy consumption typically increases, placing additional strain on already stretched household budgets.