Households urged to take action ahead of October 1 energy price rise

More than seven million households still on a standard energy tariff have been urged to send in meter readings to avoid paying higher prices from October 1.

The energy price cap will rise by 2% from Wednesday for a typical household in England, Scotland and Wales, just as cooler temperatures see many switching on their central heating.

This means that the energy bill for the average household paying by direct debit for gas and electricity will rise from the current £1,720 to £1,755 per year.

The StepChange debt charity said the £35 per year increase “seems like a small amount” but warned that new figures showed a 32% rise in average energy arrears among its clients seeking debt advice over the last two years.

Simon Trevethick, head of communications at StepChange, said: “Not only will people find they are having to switch on their heating now as the weather turns colder, but bills are also set to go up this month, which is another blow to household finances.

“Energy arrears are the most common type of debt across household bills that we see at StepChange, and people have had little respite from steep costs over the past three years.

“For anyone who is struggling or worried about energy bills, there is support available out there – contact your supplier, check to see if you’re eligible for any grants, and of course you can always get in touch with an organisation like StepChange.”

Which? Energy editor Emily Seymour said: “As we head into the colder weather, many households will be concerned that the energy price cap is going up by 2% this week.

“There are several deals on the market for lower than the price cap, so now is a good time to shop around if you’re looking to fix. As a rule of thumb, we’d recommend looking for deals cheaper than the current price cap, not longer than 12 months and without significant exit fees.

“If you’re on a variable tariff, make sure to submit a meter reading to ensure you pay the cheaper rates for any energy used before the new price cap takes effect.”

Uswitch calculated that the average home on a standard tariff would spend £140 on energy in October compared with £63 in September, thanks to a combination of higher rates and increased usage in autumn.

The increase in energy costs come despite wholesale prices falling by 2% over the three months prior to Ofgem’s latest price cap decision.

However, standing charges – the figure consumers pay per day to have energy supplied to their homes – are set to rise by 4% for electricity and 14% for gas, or 7p a day, primarily driven by the Government’s expansion of the Warm Home Discount.

Around 2.7 million more low-income households, including 900,000 families with children, are eligible for the £150 Warm Home Discount this winter, after the Government confirmed it would remove the “hard to heat” eligibility criteria.

The Government has said the change will see an estimated 6.1 million households receive the discount this winter.

Ofgem said the latest increase was also driven by an increase in electricity balancing costs – incurred by network operators to ensure a stable electricity supply for when there is both too much power and too little power in the system – adding around £1.23 a month to the average household bill.

Martin McCluskey, the minister for energy consumers, said: “We are taking urgent action to support vulnerable families this winter, expanding the £150 warm home discount to more than six million families, which helps one in five households with their energy bills.

“In the coming weeks, we will be announcing details of the biggest home upgrade programme in British history to improve up to five million homes, making them cheaper and cleaner to run.

“Wholesale gas costs remain 75% above their levels before Russia invaded Ukraine.

“The more renewables on the system, the cheaper the wholesale price of electricity, which 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.”

Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.

The energy price cap was introduced by the Government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use.

It does not limit total bills because householders still pay for the amount of energy they consume.