Energy Bills to Rise 10 Percent in Autumn, Says Ofgem

File photo of an online energy bill dated Feb. 3, 2022. Jacob King/PA

The average household energy bill will rise by £149 from October after Ofgem said that it would be increasing the price cap.

Ofgem said on Friday that prices would increase by 10 percent, from £1,468 a year to £1,717 for a typical household in England, Scotland, and Wales.

This is £117 less than the October 2023 cap, which was £1,834, but still means households will be heading into winter with higher energy prices than since the cap was lowered in April.

The regulator said one of the reasons for the increase was rising prices in the international energy market caused by political instability.

Jonathan Brearley, chief executive of Ofgem, said: “We know that this rise in the price cap is going to be extremely difficult for many households. Anyone who is struggling to pay their bill should make sure they have access to all the benefits they are entitled to, particularly pension credit, and contact their energy company for further help and support.”

The price cap sets the maximum price that energy suppliers, such as British Gas, E.On, and EDF Energy, can charge customers per kilowatt hour of energy used. The figures Ofgem provides are estimates of what an average household using gas and electricity would spend.

People Will Struggle

The ongoing cost of living crisis and the new Labour government’s decision to restrict eligibility for pensioner winter fuel payments will mean many households will struggle as the weather turns colder.

Danni Hewson, head of financial analysis at AJ Bell, said that while energy prices might not be heading towards 2022 levels—when the Russia-Ukraine war started—many people will be finding it difficult to afford that extra £149 a year.

Hewson said: “Inflation might now be hovering around ‘normal’ levels, but the price hikes experienced over the past couple of years have dented people’s standard of living and they will be faced with another winter where they’re having to watch thermostats like a hawk.

“And there are already warnings that January could bring another small increase to energy prices.”

Citizens Advice has said it was concerned about low income households—especially those with children.

Gillian Cooper, director of energy at Citizens Advice, said, “Energy bills will now be around two-thirds higher than before the crisis, and with record levels of energy debt and the removal of previous support, people are in desperate need.”

Energy Policy

Energy Secretary Ed Miliband said Ofgem’s announcement was “deeply worrying news for many families,” saying the rise was a “direct result of the failed energy policy we inherited, which has left our country at the mercy of international gas markets controlled by dictators.”

Miliband said that the only way to lower energy prices and obtain energy independence was the government’s plans for increasing renewable energy sources in the UK, citing policies such as lifting the onshore wind ban.

A Labour spokesman said that the party’s “bold energy plans will warm homes across the country, cut energy bills for good and create thousands of high-skilled, well-paid jobs as we move towards cheaper, homegrown clean power.”

Shadow Energy Secretary Claire Coutinho criticised the government’s net zero policies, saying, “Instead of prioritising cheap energy, the new Labour Government are pursuing Ed Miliband’s reckless net zero targets with no thoughts to the costs.”

During the General Election campaign, Labour had pledged to take the UK’s energy strategy into a radical redirection, including the launch of a state-owned renewable energy company called GB Energy, which it put at the centre of its plans for decarbonisation and energy security, and promising to have 100 percent “clean power” by 2030.

Pensioners Affected

An estimated 10 million pensioners are also facing a winter with even more financial pressure after the government restricted fuel payments, worth up to £300 this year, only to those receiving pension credit or other benefits.

Following the Ofgem announcement, campaigners are now calling for the government to rethink its plans to means test the winter energy subsidies.

Age UK’s charity director, Caroline Abrahams, said the policy was “reckless and wrong” and “spells disaster for pensioners on low and modest incomes.”

“This latest bad news about the energy price cap rising quite significantly makes it even more obvious that means testing (winter fuel payments) with virtually no notice and with no protections to safeguard vulnerable groups was the wrong policy choice and one that is potentially hazardous for some older people,” Abrahams said.

Coutinho also criticised the government for the move, saying that “far from their promise of saving families £300 off their energy bills, one of their first acts in office is to remove the winter fuel payment from 10 million pensioners this winter.”

“Because they weren’t honest about their plans, that means millions of pensioners will have made no plans to deal with higher energy bills this winter,” she said.

PA Media contributed to this report.