Energy bills to rise to highest level in three years for millions of households this winter

ENERGY bills will rise by 4% to their highest level in three years in a fresh blow for millions of households this winter. The energy regulator Ofgem has confirmed the new price cap, which comes into effect on October 1. Prime Minister Andy Burnham has promised to help households with the cost of living Credit: Getty Millions of households will see their energy bills rise as we head into winter Credit: Getty In just a few weeks the cap will rise from its current rate of £1,862 by around £60 a year. The new price cap will be £1,723, which looks lower than the current cap as the government has made changes to how typical energy use is calculated. Sign up for the Money newsletter Thank you! The increase will be equivalent to £5 a month for an average household that uses both gas and electricity and pays via direct debit. The price cap limits how much suppliers can charge you for each unit of gas and electricity use use. Read more on energy bills It has been steadily rising due to the conflict in the Middle East, which has pushed up global gas prices. Neil Kenward, Ofgem’s director general for markets, said: “High international gas prices are continuing to drive energy costs in the UK. “We welcome the Government’s intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter.” Meanwhile, energy bills are expected to rise by 9% again in January, which would increase the cap by another £149 to £1,872, according to forecasters Cornwall Insight. Most read in Money The news will come as a fresh blow to households who will increase their energy usage in the colder months, pushing up their bills further. Energy Secretary Miatta Fahnbulleh said: “Families will be understandably concerned about the cost of energy bills this winter, which is being driven up by the Iran War. “Energy is an everyday essential and it needs to be affordable for everyone, which is why we have cut VAT on electricity bills from October, to give families some breathing space. “This has limited the rise in the price cap and follows the £150 in costs we removed from bills earlier this year, and we will keep looking at what more we can do to protect families from unaffordable bills.” The Government has announced plans to cut the VAT on energy bills from October 1 in a bid to bring household bills down. The move is expected to save households around £45 a year, although experts suggest this will be largely wiped out by higher energy costs. 'We remain focused on giving families breathing space with the cost of living' Chancellor of the Exchequer John Healey told The Sun: I know people will see the latest update from Ofgem today for energy bills and feel worried. Households and businesses are paying the price for the conflict in the Middle East. It has pushed up prices at the pumps, our weekly shops and our bills. This isn’t a war we started. And rightly we made sure Britain wasn’t drawn in. No government can stop the squeeze felt by families and businesses with a global shock of this magnitude. It’s being felt around the world. But we can keep close watch as we move towards the New Year, and we remain focused on giving families a bit of breathing space with the cost of living. We’re a government that will look for practical action – working to put our country on a more resilient footing so we can better weather these shocks in future. Sun readers will have seen in the last few weeks the Prime Minister and my ruthless focus on putting the interests of the British people first, and on giving people hope. We are determined to make life that little bit easier for working people and Britain’s businesses. That’s why we have cut tax on electricity bills, building on the £150 cut to costs on energy bills we announced earlier this year. And why we will not shy away from the long-term solutions Britain needs, including the Warm Homes Plan, which will make millions of homes cheaper to run and lift households out of fuel poverty. Since we came into office, we have also capped bus fares and slashed business rates for pubs. That is how we begin to restore hope. That doesn’t mean maxing out the nation’s credit card. We saw the Conservatives do that and fail – the bill doesn’t disappear, it gets bigger for everyone with higher prices and higher mortgages. I know that the cost of living and cost of business is still a huge worry for people across the country and that’s why we are acting. That’s my priority as Chancellor and that’s my promise to you. Should you lock into a fixed deal? A fixed energy tariff can give you security that your bill will not be affected by changing market conditions. By locking into a fixed tariff you can be sure of how much you will pay for the duration of your deal. But if energy prices come down you will still have to pay the price you agreed at the start of your contract. Meanwhile, there may be an exit fee if you want to leave your contract early. You could save around £100 or more by locking into a fixed deal now, according to Ofgem. Meanwhile, many suppliers offer tariffs with cheaper electricity to smart meter customers for electricity used outside of peak times. Read the terms and conditions carefully and speak to your supplier if any of the information is unclear. Use a comparison website such as Uswitch or MoneySuperMarket to compare the deals on offer. Meanwhile, it’s also a good idea to take steps to cut the costs of your bills. For example, you could turn down your thermostat, adjust your boiler flow settings and use more energy-efficient appliances. If you receive means-tested benefits then you may be able to apply for the Warm Home Discount, which gives you £150 off your energy bills. The scheme for the 2026 to 2027 winter period will reopen in October. How to save on your energy bills SWITCHING energy providers can sound like a hassle - but fortunately it's pretty straight forward to change supplier - and save lots of cash. Shop around – If you’re on an standard variable tariff you are likely to be throwing away over £200 a year. Simply use a comparison site such as MoneySuperMarket.com, uSwitch or EnergyHelpline.com to see what deals are available to you. The cheapest deals are usually found online and are fixed deals – meaning you’ll pay a fixed amount usually for 12 months. Switch – When you’ve found one, all you have to do is contact the new supplier. It helps to have the following information – which you can find on your bill – to give the new supplier. Your postcode Name of your existing supplier Name of your existing deal and how much you pay An up-to-date meter reading It will then notify your current supplier and begin the switch. It should take no longer than three weeks to complete the switch and your supply won’t be interrupted in that time. 2 comments2