Millions of UK households warned as energy bills set to rise again this winter

Millions of households have been warned to brace themselves for higher winter energy bills.

Industry experts Cornwall Insight is forecasting that energy regulator Ofgem will increase its price cap to an average of £1,737 a year from the start of October. If so, it would be £17 a year - or 1% - more than the current level of the cap.

The predicted rise comes despite previous indications that bills would be lower this winter, and has been driven in part by funding an expansion of the Warm Home Discount for vulnerable households.

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Ofgem reviews its price cap every three months and is due confirm the level from October 1 on Wednesday next week. The cap from July to September fell to £1,720 a year, but covered the summer when many households use the least energy. The next cap, on the other hand, will prove a double blow as it is when those who can afford to usually turn up the heating.

Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “News of higher bills will not be welcomed by households, especially as winter approaches.

”While the added costs behind this forecasted rise are aimed at supporting those most in need, it does mean typical bills will increase despite relatively lower wholesale costs. It’s a reminder that the price cap reflects more than just the market price of energy.”

The £17 a year average rise will add more than £350million to household energy bills. However, the exact amount customers will end up paying depending on a host of factors, from how much energy they use to where they live.

The level of price cap will also be updated again at the start of January, with Cornwall Insight predicting a small drop. “However, this is subject to geopolitical movement, weather patterns, changes to policy costs and the potential introduction of new policy costs such as those to support investment in new nuclear generating capacity,” it added.

The predicted October rise reflects upcoming changes Cornwall Insight assumes Ofgem will be introducing, including the expansion of the Warm Home Discount scheme for vulnerable households that was announced by the government in June - adding around £15 to a typical bill. It will provide £150 in support to an additional 2.7 million people.

Households who are impacted by Ofgem's energy price cap, mainly those on standard variable tariffs, are being urged to act, including switching to a cheaper fixed price deal.

Scott Byrom, chief executive of The Energy Shop, said: "It’s crucial to remember that between October to March, we use more than 75% of our annual gas consumption to heat our homes.

”With the long dark nights, we also see our electricity consumption increase equating to almost 60% of our annual electricity consumption in this six month period.

"The fact UK energy switching remains 50% down compared to pre-energy crisis levels, despite UK energy costs being amongst the highest in the world, shows that apathy is creeping back in and consumers are missing out on big energy savings."

Richard Neudegg, director of regulation at the wesbite Uswitch.com, said: “A predicted 1% increase in the October price cap may not seem significant - but it brings into sharp focus that consumers need to get ready for the winter now.

“Most households will use significantly more energy in the colder months, so the October cap rates will dictate the cost of keeping our homes warm as winter starts to bite for those households still on the price cap.

“Bill payers on a standard variable tariff can beat these expected rises and save on bills by switching to a well-priced fixed deal now. We are seeing the strongest savings in three months, around £298 for the average household.”

Higher energy bills are the last thing many households need given grocery bills have spiked again, and coming after April's increase in water charges.

It also threatens to push up inflation still further, something the Bank of England is keen to control before it is next willing to lower interest rates.