Price cap energy: bills to rise by £149 as Ofgem increases new October 2024 price cap by 10% ahead of winter

• The average UK household energy bill is set to rise by £149 from October as Ofgem raises its price cap
• The cap, introduced in 2019, limits the maximum price energy suppliers can charge per kilowatt hour (kWh) but does not cap total bills
• The increase will significantly affect households as winter typically drives higher energy usage
• Around 10 million pensioners will also lose out on winter fuel payments due to recent changes in government policy
• Ofgem attributes the price cap rise to higher energy prices driven by political tensions and extreme weather
• Experts anticipate further increases in the price cap in January due to ongoing tensions in the Russia-Ukraine conflict

The average household energy bill is set to rise by £149 from October.

Ofgem has increased its energy price cap by 10% ahead of the winter season, raising it from the current £1,568 to £1,717 for a typical household in England, Scotland and Wales.

The new cap is about £117 lower than the one the regulator put in place last October, which stood at £1,834.

But what is the energy price cap, and what does its rise mean for the average UK household? Here is everything you need to know about it...

What is the energy price cap?

The energy price cap was introduced by the Government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use.

The cap is designed to protect consumers from excessively high energy prices, and is typically reviewed and adjusted every three months to reflect changes in the wholesale energy market.

Prices for energy can rise or fall based on supply and demand, and if suppliers face higher costs, the cap may be adjusted to allow them to cover these costs while still keeping prices reasonable for consumers.

The regular adjustments help ensure that the cap remains in line with current market conditions and costs, providing a balance between fair pricing for consumers and sustainability for energy suppliers.

The price cap does not limit a household’s total bills because people still pay for each unit of gas and electricity they use.

According to Ofgem, the figures represent what a household using gas and electricity and paying by direct debit can expect to pay with typical energy usage. If more energy than average is used, a household will pay above the cap.

What will the price cap rise mean?

The rise in the energy price cap ahead of the colder winter months is likely to have significant implications for energy customers, particularly those who are vulnerable or struggling financially.

With the rise, households will face higher energy bills, which could be substantial during winter when energy consumption typically rises due to heating needs.

For many households, especially those on fixed incomes or with tight budgets, the higher bills may strain finances and lead to difficult choices between heating and other essential expenses.

Gillian Cooper, director of energy at Citizens Advice, said: “We’ve braced ourselves for a challenging winter but today’s price cap increase will no doubt see even more people fall behind on their energy bills.

“We’re particularly concerned about households with children and young people and those on lower incomes, who are most likely to struggle with their heating costs.

“Energy bills will now be around two-thirds higher than before the crisis, and with record levels of energy debt and the removal of previous support, people are in desperate need.”

Millions of pensioners are also set to receive less support with energy and fuel this winter.

In July, Chancellor Rachel Reeves announced her decision to end the previously universal Winter Fuel Payment for pensioners - unless they receive pension credits or other benefits.

That means that around 10 million pensioners will miss out on payments of up to £300 this year.

Why has the price cap gone up?

Ofgem attributed the increase to rising prices in the international energy market, driven by heightened political tensions and extreme weather events.

Energy Secretary Ed Miliband blamed the price cap hike on the “failed energy policy we inherited [from the Conservative government], which has left our country at the mercy of international gas markets controlled by dictators”.

October 2024’s price cap will be significantly lower than during the peak of the energy crisis, which was exacerbated by Russia’s invasion of Ukraine.

But experts anticipate another increase in January, with further rises possible early next year due to escalating tensions in the Russia-Ukraine conflict.

What can I do if I’m struggling with energy bills?

Jonathan Brearley, chief executive of Ofgem, said: “We know that this rise in the price cap is going to be extremely difficult for many households.

“Anyone who is struggling to pay their bill should make sure they have access to all the benefits they are entitled to, particularly pension credit, and contact their energy company for further help and support.”

We have a full guide on how to claim pension credit - and how much you could get - which you can access by clicking here.

Brearley also urged consumers to “shop around” and consider a fixed-rate tariff that could save money.

“We are working with Government, suppliers, charities and consumer groups to do everything we can to support customers, including longer term standing charge reform, and steps to tackle debt and affordability,” he added.

Customers can also inquire with their energy supplier about social tariffs - special pricing plans designed to assist vulnerable or low-income households with their energy costs.

The availability and specifics of these tariffs can vary by region and energy supplier. To find out about available options and apply with your energy supplier, contact them directly.

Suppliers often have dedicated services or teams to assist with this process. Some government programs, such as the Warm Home Discount Scheme, also offer financial assistance that may complement social tariffs.

We know that rising energy costs are a concern for many, and we want to hear from you. How will this increase impact your household? Do you have any tips for saving on energy bills? Share your thoughts and experiences in the comments section.