Households face fresh pressure on living costs this autumn after forecasters warned that energy bills will rise in October, reversing earlier expectations of a fall.
Consultancy Cornwall Insight said the regulator Ofgem’s price cap – which limits what suppliers can charge a typical household, is set to climb by around £17, or 1%, to £1,737 a year for a dual-fuel customer paying by direct debit. The official figure will be confirmed by Ofgem on 27th August.
Why bills are rising despite lower wholesale costs
The rise comes despite a steady fall in wholesale gas prices over the summer, which have dropped back to their lowest levels in more than a year. Instead, the increase reflects changes to policy costs, most notably the expansion of the Warm Home Discount scheme.
The government announced in June that the discount – which provides £150 in support to vulnerable households – will be extended to 2.7 million more people this winter. While welcome for those eligible, the change will add around £15 to the average bill, effectively spreading the cost across all consumers.
Cornwall Insight’s Dr Craig Lowrey noted:
“It’s a reminder that the price cap reflects more than just the market price of energy. While the added costs are aimed at supporting those most in need, typical bills will still increase despite relatively lower wholesale costs.”
Geopolitics still casting a shadow
The wholesale market has been buffeted by global tensions. Prices spiked in June amid fears of disruption to liquefied natural gas shipments following Israeli airstrikes on Iran, before easing as European gas storage levels improved and EU rules on winter reserves were relaxed. Uncertainty over US trade policy has also weighed on sentiment.
Analysts caution that while today’s forecast rise is modest, energy remains exposed to volatile global events, from Middle East conflict to extreme weather.
What happens next
Cornwall Insight expects bills to fall slightly in January, but warns the outlook is highly conditional on geopolitics, policy changes and winter temperatures. Additional charges – for example, to fund investment in new nuclear power stations – could push prices higher in the future.
In the longer term, Ofgem is reviewing how the costs of Britain’s energy system are shared between households. That could see some customers benefit while others shoulder more of the burden.
The bigger picture
For millions of families, any increase is unwelcome as budgets remain tight after two years of high inflation. Although energy bills are now far below the peaks of 2022, they remain significantly above pre-crisis levels.
“The real hope for lasting relief lies in the transition to clean power and greater energy independence,” said Lowrey. “That will take time, investment and no small amount of disruption – but in the end, it offers the only route to stability and affordability.”
