Energy Price Cap Set to Rise in October, Impacting Households Across the UK
- Ofgem announces a 10% rise in energy prices for 27 million households in the UK.
- The increase is attributed to higher wholesale gas prices, urging consumers to seek fixed-rate deals.
- Households are expected to pay an average of £149 more per year for energy.
The energy price cap in the UK will increase to an annual average of £1,717 in October, marking a £12 monthly rise for households paying by direct debit. This adjustment keeps the cap approximately £500 higher than pre-Ukraine invasion levels. The cap, which limits what utility companies can charge for gas and electricity, is based on the consumption patterns of a typical household, and actual costs will vary depending on individual energy usage. Originally introduced in 2019, the energy price cap was designed to protect consumers by capping the unit rates for gas and electricity. Following significant fluctuations due to geopolitical tensions, the COVID-19 pandemic, and inflation, the regulator Ofgem began quarterly reviews of the cap in August 2022 to stabilize the energy market. The cap had previously peaked at £1,971 from April to September 2022, prompting government interventions to limit household bills. As a result of the new cap, typical household energy bills will rise by £149 annually, with average users now expected to pay £1,717. This increase comes amid the withdrawal of some government support measures, including the cessation of winter fuel payments for 10 million pensioners, further straining household budgets. With many households already facing financial difficulties, the rise in energy costs is concerning. Ofgem reports that £3.3 billion is owed to suppliers by customers struggling to pay their bills, highlighting the urgent need for support and solutions as winter approaches.