Energy bills ‘to rise by £146’ in October

The average household energy bill is set to rise by £146 in October, experts say.

Energy consultancy Cornwall Insight said typical bills would likely go up by 9% to £1,714 a year, up from £1,568 currently, when the latest price cap change takes effect.

The figure is below its previous prediction in June, when it estimated that the cap would rise by 9.9% to £1,723.

However, the group said there is likely to be a further “modest” increase in January 2025, with more rises possible early in the new year due to “recent tensions in the Russia-Ukraine war“.

It comes following a recent rise in wholesale gas prices amid concerns the conflict could escalate.

Regulator Ofgem will announce the energy price cap for October to December at 7am on Friday.

Craig Lowrey, principal consultant at Cornwall Insight, said: “This is not the news households want to hear when moving into the colder months.

“Following two consecutive falls in the cap, I’m sure many hoped we were on a steady path back to pre-crisis prices.

“However, the lingering impact of the energy crisis has left us with a market that’s still highly volatile and quick to react to any bad news on the supply front.

“Despite this, while we don’t expect a return to the extreme prices of recent years, it’s unlikely that bills will return to what was once considered normal. Without significant intervention, this may well be the new normal.”

Ofgem changes the price cap every three months based on several factors, including the price of energy in wholesale markets.

It 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 price cap does not limit a household’s total bills because people still pay for each unit of gas and electricity they use – the figures provided are calculated for an average-use household. If more energy than average is used, a household will pay above the cap.

Ofgem is currently considering a range of reforms to protect prices in future, including the suitability of the price cap and a potential permanent ban on so-called acquisition tariffs – cheaper prices for new customers to lure them away from their existing supplier.

Cornwall Insight has called for reform of the price cap or the introduction of social tariffs, but said longer-term solutions were also vital.

Mr Lowrey added: “We must also develop a long-term strategy to secure our energy future. This means a fundamental overhaul of our energy system, with a strong emphasis on increasing domestic energy production.”

The government has said household bills should drop by £300 per year following the introduction of its new publicly-owned firm GB Energy.

However, Prime Minister Sir Keir Starmer has not given a timetable for when bills will fall, and said the scheme would take “time to develop”.