Household energy bills are set to reach a three-year high as regulator Ofgem announces a 4% increase from October.
The price cap, which reflects the rise in wholesale gas costs for suppliers, will impact household bills just as colder weather approaches.
Ofgem stated that the price cap will increase by 4% compared to the current level, meaning a household with typical gas and electricity usage will pay an additional £60 per year.
However, over a third of households are currently on fixed tariffs, so their prices will remain unchanged.
Energy suppliers report a significant increase in energy debt and, anticipating persistently high bills, are calling for more support for those struggling to afford their payments.
The government has announced a cut in VAT on electricity bills starting in October, which will also benefit those on fixed deals. Energy Secretary Miatta Fahnbulleh affirmed that ministers will "keep looking at what more we can do to protect families from unaffordable bills."
Despite these measures, analysts at the energy consultancy Cornwall Insight forecast that domestic energy prices could rise by a further 9% in the new year, potentially causing renewed concern for households during the coldest period.
Neil Kenward, Ofgem's director general for markets, commented, "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."
He added, "Savings are available by choosing a fixed tariff, which are available at £100 or more below the October price cap."
More billpayers have fixed
Approximately 35% of households, equating to 11 million, are already on fixed tariffs. However, 22 million households in England, Wales, and Scotland are subject to tariffs affected by the price cap.
Ofgem has indicated that the price cap will rise by £60 annually, or £5 per month, to £1,723 for the average household using both electricity and gas, assuming this level is maintained for a year.
The energy cap sets a maximum price per unit of gas and electricity, not a limit on the total bill. Therefore, a household's final bill will depend on their actual consumption.
In July, Ofgem revised its estimate for "typical" energy use downwards. This adjustment was made because many homes have reduced their consumption due to high prices in recent years, and energy efficiency has improved.
The new estimate for annual usage is 9,500 kWh of gas and 2,500 kWh of electricity.
