Energy Cap Increase: What You Need to Know

The UK's energy cap is set to increase by 4% in October, affecting millions of households. The regulator Ofgem says the price cap will rise by £60 to £1,723 for typical annual bills.

Higher wholesale gas costs due to the US-Israel war with Iran have driven up prices. Gas bills are rising by 8%, which means households that do not use gas will see an energy bill increase of less than 1%.

The government's decision to remove VAT from domestic electricity bills has also affected the new price cap, reducing the typical annual bill by £45 for direct debit customers.

Fixed-term energy deals are not affected by changes to the energy cap. Customers on these deals will continue to pay their usual prices until the end of their tariff.

The increase in the energy price cap reflects higher wholesale gas costs which have been pushed up by the US-Israel war with Iran.

The typical annual usage figure applies to dual-fuel households on a standard variable tariff which pay by direct debit. However, customers' actual bills depend on the amount of energy used and how they pay for it.

For the roughly 11 million households on fixed tariffs, they will not be affected by this increase. The Ofgem cap is based on 'typical' household energy use in a year with a single bill for gas and electricity settled by direct debit.

The regulator has previously calculated that a 'typical' household uses 11,500 kWh of gas and 2,700 kWh of electricity in a year. However, it is reducing this 'typical' energy use because many households have cut back due to high prices in recent years and are benefiting from improvements in energy efficiency.

The typical average bill since 1 July is £1,663. The government's decision to remove VAT from domestic electricity bills has also affected the new price cap - Ofgem says the typical annual bill would have been £45 higher without that cut.

The increase in the energy price cap is driven by higher gas prices.

Higher gas prices are driving up energy costs for households across the UK. This increase in the energy price cap is expected to affect millions of households, particularly those on standard variable tariffs.

The impact of the energy price cap will be felt by consumers and businesses alike. The government has announced plans to review the cap in 2027 to ensure it remains effective in controlling energy prices.

As the UK continues to navigate the challenges of rising energy costs, it is essential for households and businesses to stay informed about the latest developments and take steps to manage their energy bills effectively.

The increase in the energy price cap reflects higher wholesale gas costs which have been pushed up by the US-Israel war with Iran. The typical annual usage figure applies to dual-fuel households on