Image source, Getty ImagesPublished6 August 2021Updated 8 minutes agoTypical annual energy bills will rise by £60 to £1,723 in October, under regulator Ofgem's latest energy price cap.
The increase of around 4% in the cap affects millions of people in England, Scotland and Wales, and reflects higher wholesale gas costs which have been pushed up by the US-Israel war with Iran.
The energy cap fixes the maximum amount which customers on standard variable tariffs can be charged for each unit of gas and electricity used.
It covers around 33 million households in England, Wales and Scotland and is set by the regulator Ofgem every three months, external.
around 7 million pay by standard credit (they pay when they get a bill)
Most of the increase in the energy price cap is driven by higher gas 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 - Ofgem says the typical annual bill would have been £45 higher without that cut.
While Ofgem's director general for markets Neil Kenward said the price rise for October to December was technically 3.6%, Ofgem always rounds the number which is why it publicised the 4% figure.
The typical annual usage figure applies to the first category: dual-fuel households on a standard variable tariff which pay by direct debit.
But 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.
Ofgem regulates the energy market in England, Scotland and Wales. Northern Ireland has a separate system.
Although the price cap sets the unit prices for gas and electricity, your household's actual bill depends on the overall amount of energy you use, and how you pay for it.
Where you live, the type of property you have, how energy efficient it is, how many people live there, and the weather all make a difference.
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 vast majority of people pay their bill this way to help spread payments across the year.
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.
Its new estimates assume annual use of 9,500 kWh of gas and 2,500 kWh of electricity.
Using these numbers the typical average bill since 1 July is £1,663.
Ofgem previously changed its consumption estimates in 2019 and 2023.
What are standing charges and how are they changing?Ofgem also controls standing charges, which are a fixed daily fee to cover the costs of connecting households to gas and electricity supplies. These vary slightly by region, external and payment method.
Between 1 July and 30 September 2026, average standing charges for direct debit customers will be 57.19p a day for electricity and 29.04p a day for gas.
These are largely unchanged from the amounts charged in the previous three-month period.
Campaigners have long argued that standing charges are unfair because they make up a bigger proportion of the bill for low energy households.
In response, Ofgem said it wants all energy firms to offer at least one tariff that has a low standing charge but higher cost per unit of energy.
The regulator said this would give some customers more choice and control but acknowledged it would not be suitable for everyone.
Charities, campaigners, and the suppliers' trade body criticised the proposal for just shifting the cost from one part of the bill to another rather than cutting it.
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Customers with working smart meters do not need to submit a reading as their bill is calculated automatically.
They are not affected by changes to the energy cap because their price will not move until the end of their tariff.
Fixed deals certainty for a set period – often a year, or longer – but if energy prices drop while you are on the deal, you could be stuck at a higher price. You may also have to pay a penalty to leave a fixed deal early if you change your mind.
Ofgem says moving to a fixed deal can protect customers from future cap increases. However, it is important to understand all the costs involved, including any penalties if you decide to leave the deal early.
Experts recommend checking whole-of-market energy price comparison sites to help find the best deal.
Since 1 April, charges related to the insulation scheme - called the Energy Company Obligation - have been scrapped, and for three years, renewable energy projects will be 75%-funded by general taxation instead of a levy on energy bills.
Before the changes, energy bills in England, Scotland and Wales included additional charges to help fund insulation for low-income households, and subsidise green energy projects such as wind farms and solar panels.
Nearly everyone in England, Wales and Scotland will benefit from this cut, although the amounts will vary between households.
However, the cost of maintaining and strengthening energy network infrastructure like power lines, cables and gas pipes is rising.
In December 2025, Ofgem said it had approved a £28bn investment to improve the electricity and gas grids in Great Britain.
It said this will strengthen the energy supply, and better shield customers from volatile energy prices. It will also reduce Britain's dependence on gas.
Customers will pay part of the cost of the upgrade, through an additional £108 added to energy bills by 2031.
These charges started to appear from April 2026, adding about £6 a month to the bill for a typical household covered by the energy cap.
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Analysts at the energy consultancy Cornwall Insight have forecast domestic energy prices may rise a further 9% in the new year, bringing renewed concern to households during the coldest months.
Ofgem's Kenward said the main price cap change for the New Year will come from international gas prices.
He said if the conflict in the Gulf is resolved and the flow of gas through the Strait of Hormuz picks back up, prices could come down. However he added prices could equally rise.
Heating oil is not covered by the energy cap. About 1.5 million UK households use heating oil and they have already seen a sharp increase in bills since the Middle East conflict triggered a jump in oil prices. Some users have seen costs more than double.
The issue of rising prices is particularly acute in Northern Ireland, where about 500,000 homes use heating all, almost two-thirds of all households.
In March, the government announced a £53m support package to help low-income households in rural communities who use heating oil.
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