Millions of households across Britain will face another increase in energy costs from October, with the latest price cap set to reach its highest level in three years amid continued pressure from global energy markets, according to FT reports. 

The energy regulator Ofgem said the price cap for around 22 million households would rise by 4%, taking the annual equivalent bill for a typical household to £1,723 from October, compared with £1,663 under the current cap covering July to September.

The increase comes after bills rose by 13% in July as soaring global energy prices, linked to the war on Iran, pushed up the cost of gas and electricity. The latest increase means households will have faced higher charges in consecutive quarters.

Clare Moriarty, chief executive of Citizens Advice, said, as told by The Guardian, that the increase reflected growing pressure on household finances, warning that energy costs were contributing to falling living standards and rising debt.

Households face higher costs

The latest increase means a typical household will pay around £350 more a year than it did in 2024, when the Labour government came to power after promising to reduce household energy bills by £300 a year by the end of the decade.

Around one-third of households on fixed-rate energy deals will not be directly affected by the October price-cap change.

From October, the electricity unit rate will rise from 26.11 pence per kilowatt-hour to 26.32 pence, while the gas rate will increase from 7.33 pence to 7.97 pence. Actual bills will vary depending on how much energy individual households use.

Ofgem's calculation also reflects a reduction in the estimated amount of energy used by a typical household, as high prices have forced consumers to cut consumption. Using the previous assumptions about annual energy use, the October price cap would have been equivalent to £1,940.69.

The standing charges paid by households regardless of consumption will also change. The daily gas standing charge will rise from 29.04 pence to 29.68 pence, while the electricity standing charge will fall from 57.19 pence to 54.83 pence. Combined, the charges remain at their highest level since July 2023.

Source:Websites