Energy prices to rise by more than expected ahead of winter

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

The increase, which is slightly more than expected, means a household using a typical amount of energy will pay £1,755 a year, up £35 a year on the current cap.

The increase will kick in at the start of October, which campaigners say will mean another winter of relatively high energy bills.

Ofgem’s cap sets the maximum price that can be charged for each unit of gas and electricity for about 20 million households in England, Scotland and Wales.

Individual households can calculate their estimated specific change by adding £2 onto every £100 they spend at the moment on energy each year.

The cap sets the price for each unit, but not the total bill which depends on how much energy you use.

The change comes into force at the start of October and lasts for three months.

Ofgem changes the cap, largely based on the cost of energy on wholesale markets.

However, the rise in bills this time is partly the result of extra support measures, previously announced by the government and in place this winter.

Anyone on means-tested benefits will automatically receive the £150 Warm Home Discount on their bills. Some previously did not qualify owing to the size of their property, but that condition will be scrapped.

All billpayers will chip in to fund this extra support, which is on top of the government’s U-turn on winter fuel payments.

Campaigners say many households are still struggling to pay bills, as well as repay energy debt that built up during a period of high prices.

Simon Francis, coordinator of the End Fuel Poverty Coalition, said this would mean another winter of high prices.

“The average family still paying hundreds of pounds more than they did just a few years ago,” he said.

Families enjoying chips at New Brighton, Merseyside, may have been making the most of the sunshine, but the cost of living still looms large.

“At the moment, it’s been ok, but I think the winter might be a different story,” said Elisha, who has an 11-week-old baby, Theo.

The consumer group Which? said it could be a good time to shop around for a fixed-price deal, but billpayers should be alert to exit fees.

“Some contracts charge large fees to leave early, which would cancel out any savings,” said Emily Seymour, from Which?.