Ofgem ups energy price cap
The energy watchdog has announced that the energy price cap will be raised by a higher than expected two per cent between October and December.
Ofgem’s decision is set to push the typical household’s energy spend up to £1,755 per year, despite a fall in wholesale energy prices.
This comes following a price dip over the summer, after the regulator cut the quarterly price cap by seven percent from May.
While the new cap means a return to rising energy bills, the figure is 0.9 per cent lower than in the same period in 2024 – when adjusted for inflation.
And the figure is £625 lower than at the peak of the energy crisis in early 2023.
Over the summer, the energy sector has been hit by the fall in wholesale prices, with Eon’s turnover dropping by £800m in July.
Cost of living squeeze tightens
Danni Hewson, AJ Bell’s head of financial analysis, described the news as “a blow to many hard-working families”.
“Whilst we are nowhere near the highs experienced in late 2022 and early 2023, there’s no sign of bills returning to the kind of levels we’d got used to before Russia invaded Ukraine, despite recent stabilisation in wholesale energy costs.”
Hewson added: “Over the past couple of years people have used every trick in the book to make sure their energy usage was as efficient as possible, so there will undoubtedly be families keeping everything crossed that this winter will be a mild one.”
Energy minister Michael Shanks said: “We know that any price rise is a concern for families. Wholesale gas prices remain 75% above their levels before Russia invaded Ukraine. That is the fossil fuel penalty being paid by families, businesses and our economy.
“That is why the only answer for Britain is this government’s mission to get us off the rollercoaster of fossil fuel prices and onto clean, homegrown power we control, to bring down bills for good.
“At the same time, we are determined to take urgent action to support vulnerable families this winter. That includes expanding the £150 Warm Home Discount to 2.7 million more households and stepping up our overhaul of the energy system to increase protections for customers.”
Shadow energy secretary Claire Coutinho slammed the elevated price cap in a post on X, saying: “Labour promised to cut bills by £300 but that couldn’t be further from the truth.
“Standing charges are up by up to 14%, and balancing costs have risen meaning our energy bills are going UP even while wholesale prices are FALLING.
“These aren’t global markets, these are Ed Miliband’s political choices.”
Meanwhile, Reform UK deputy leader Richard Tice said: “Labour promised bills would come down – they lied”, adding: “More renewables = higher bills”.