Household energy bills across England, Scotland, and Wales are set to rise by four per cent from October, adding around £60 a year to standard domestic energy costs just as Britons prepare to turn the heating back on.

The energy regulator, Ofgem, has confirmed that the new price cap will increase to £1,723 annually for a typical dual-fuel household, up from the current level of £1,663. This new rate takes effect on 1 October and will remain in place until 31 December. It is worth remembering that the cap does not limit your total bill; rather, it sets the maximum amount suppliers can charge per unit of gas and electricity, alongside daily standing charges, so what you actually pay will still depend on how much power you use.

If you are on a fixed-rate tariff or living in Northern Ireland, these changes will not affect you. The cap applies specifically to households on standard variable tariffs who have not switched to a fixed deal. Energy consultancy Cornwall Insight, whose forecasts are closely tracked across the sector, had predicted a four per cent jump to £1,729 in its final estimate before the announcement, noting that on a unit-for-unit basis, this level represents the highest price since July 2023.

There are also technical factors behind these headline numbers that are important to understand. Today’s figure is measured against Ofgem’s revised definition of a typical household, which was introduced on 1 July to reflect falling average energy consumption. Furthermore, the change coincides with the removal of VAT on domestic electricity from 1 October, meaning the headline cap is not directly comparable with caps set earlier in the year.

Addressing the rise, Energy Secretary Miatta Fahnbulleh pointed directly to international pressures, stating that winter bills are being driven up by the Iran War. She highlighted that the Labour Government has removed VAT on electricity bills from October, expanded eligibility for the £150 Warm Home Discount scheme, and is doubling down on its Warm Homes Plan to help cut household costs.

In her statement, Fahnbulleh explained: "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."

From the regulator's perspective, Neil Kenward, Ofgem’s director general for markets, stated that high international gas prices continue to drive UK energy costs. He noted that without the government’s intervention to remove VAT from electricity bills, consumers would have faced even higher costs heading into the winter months.

Consumer support specialists are also urging households to take early action. Sebrina McCullough, director of external relations at Money Wellness, pointed out that people budget using their own energy bills rather than Ofgem’s statistical benchmarks. She advised that anyone already struggling with costs should not wait until the height of winter, but should instead contact their supplier and check their eligibility for support schemes as early as possible.

As we head towards October, the big decision for many of you will be whether to look for a fixed energy deal before the new rates take effect. How international gas markets respond and what further measures ministers may look at to support families remain the key questions to watch. I'll be following this one.