Energy price cap rises by 2%

Gas and electricity prices will rise by 2% for millions of households under the latest cap announced by energy regulator Ofgem.

The energy price cap will rise by £35 per year for a typical household from October. While the rise is small, it underscores the fact that energy costs remain stubbornly high.

With energy debt across the UK now standing at over £4.2 billion, millions of households are still carrying the weight of debt built up during the energy crisis of 2022 – when bills soared to unprecedented levels – and beyond. With repayments ongoing and current costs already stretching budgets, today’s increase will intensify this financial strain.

Vikki Brownridge, CEO at StepChange Debt Charity, said “There’s no doubt that energy bills remain a challenge for our clients, and we’ve seen a steep increase in energy arrears over the last two years – our latest data shows a 7% rise in average arrears year on year. The fact is that keeping up with payments whilst repaying historic debt is a constant struggle for households on lower incomes, and not something that can be dealt with easily. This has a knock-on effect on people’s ability to pay other financial commitments, and risks trapping people in a cycle of debt.

“Ofgem is currently consulting on whether to introduce a debt relief scheme to help struggling households get back on track. Energy debt is the most common type of household arrears we see at StepChange, and a well-designed scheme would be an important step in helping to alleviate some of these pressures. However, energy affordability does remain a problem that needs attention from government, and we urgently want to see a long-term solution to protect consumers from unaffordable energy costs.”

Gas and electricity prices will rise by 2% for millions of households under the latest cap announced by energy regulator Ofgem.

The energy price cap will rise by £35 per year for a typical household from October. While the rise is small, it underscores the fact that energy costs remain stubbornly high.

With energy debt across the UK now standing at over £4.2 billion, millions of households are still carrying the weight of debt built up during the energy crisis of 2022 – when bills soared to unprecedented levels – and beyond. With repayments ongoing and current costs already stretching budgets, today’s increase will intensify this financial strain.

Tim Jarvis, Director General, Markets at Ofgem, said “While there is still more to do, we are seeing signs of a healthier market. There are more people on fixed tariffs saving themselves money, switching is rising as options for consumers increase, and we’ve seen increases in customer satisfaction, alongside a reduction in complaints.

“While today’s change is below inflation, we know customers might not be feeling it in their pockets. There are things you can do though – consider a fixed tariff as this could save more than £200 against the new cap. Paying by Direct Debit or smart pay as you go could also save you money.

“In the longer term, we will continue to see fluctuations in our energy prices until we are insulated from volatile international gas markets. That’s why we continue to work with government and the sector to diversify our energy mix to reduce the reliance on markets we do not control.”

Vikki Brownridge, CEO at StepChange Debt Charity, said “There’s no doubt that energy bills remain a challenge for our clients, and we’ve seen a steep increase in energy arrears over the last two years – our latest data shows a 7% rise in average arrears year on year. The fact is that keeping up with payments whilst repaying historic debt is a constant struggle for households on lower incomes, and not something that can be dealt with easily. This has a knock-on effect on people’s ability to pay other financial commitments, and risks trapping people in a cycle of debt.

“Ofgem is currently consulting on whether to introduce a debt relief scheme to help struggling households get back on track. Energy debt is the most common type of household arrears we see at StepChange, and a well-designed scheme would be an important step in helping to alleviate some of these pressures. However, energy affordability does remain a problem that needs attention from government, and we urgently want to see a long-term solution to protect consumers from unaffordable energy costs.”

Independent Age Chief Executive Joanna Elson CBE said:

“Older people on low incomes across the country have had their budgets stretched to breaking point, and today’s energy price cap announcement will bring further anxiety, as a typical household bill will rise yet again to £1,755. Winter is around the corner and even small increases will be too much to bear for many of the people in later life we speak to who are already making drastic cutbacks. Last winter, too many older people in financial hardship were left behind choosing between heating and eating, and avoiding meeting loved ones because they were embarrassed to invite people to their cold homes.

“Currently there are over one million older households living in fuel poverty. Immediate action is needed to bring this number down. The UK Government needs to increase the Warm Home Discount from £150 to £400 to match the sharp increase in energy bills alongside creating an energy social tariff that protects customers of all ages on low incomes. We cannot have another winter where anyone experiencing financial hardship is left in the cold.”