Winter energy prices expected to rise to three-year high

Energy bills for millions of households are expected to rise this winter to the highest level for three years, under a price cap to be announced by the industry regulator on Wednesday.

The cap will reflect the rise in the wholesale cost of gas, paid by suppliers and will hit bills just as the colder weather arrives in October until the end of December.

Analysts expect Ofgem to say prices will go up by 4% compared with the current cap, affecting those on variable tariffs in England, Scotland and Wales.

Firms say energy debt has jumped and, with high bills likely to persist, have called for more support for those struggling to pay. The government says VAT is being cut from electricity bills.

The price cap for about 33 million households is expected to rise, driven by volatility in international wholesale gas prices.

The average price of gas has been 61% higher over the past three months compared to late 2025, according to suppliers' trade body Energy UK.

Millions of people have moved on to fixed energy tariffs, some in response to the uncertainty created by the impact of the US-Israeli war with Iran.

Anyone on a fixed deal will not see the price they pay rise, until at least the end of the term of their tariff. About 40% of billpayers have fixed tariffs.

The energy cap sets a maximum price for each unit of gas and electricity, not the total bill, so a household's final bill depends on what they use.

In July, Ofgem reduced what it believes to be a "typical" level of energy use, because many homes have cut back owing to high prices of recent years while energy efficiency has improved.

Its new estimate is 9,500 kWh of gas and 2,500 kWh of electricity a year.

Cornwall Insight, the consultancy, has forecast that a household using a typical amount of gas and electricity, paid through direct debit, will pay £1,729 a year from October.

This is up from £1,663 between July and September and woild be the highest for three years.

Households are paying hundreds of pounds a year more on average than before Russia's full-scale invasion of Ukraine in 2022 started the energy crisis. Bills have gone up by about 70% compared with the pre-crisis norm, according to industry data.

That means unpaid bills and charges have shot up. Energy UK estimates total debt to have collectively risen to £6bn, with an expectation of it to increase to about £7bn by the end of the year.

The average billpayer in debt, without a payment plan, owed £3,500, it said.

The trade body has called for a flexible discounted tariff for those most in need, funded by taxation. That is supported by many debt charities.

"Without urgent intervention – namely a national social tariff and implementation of the long-awaited debt write off scheme from Ofgem – we expect this [debt] figure to rise in the coming months, and with that see an increase in the number of people coming to us for help with energy bills," said Emily Whitford, senior public policy advocate at StepChange.

The Trades Union Congress has called for a windfall tax on bank profits to be used to reduce energy bills.

The government is cutting VAT from electricity bills in October, which should knock about £50 off a typical annual bill, and some policy costs were cancelled or shifted in April, but ministers say there is more to do.

Suppliers offer a host of support schemes to anyone struggling to pay, or who is likely to find it difficult.

Energy UK has a list of these schemes. But it stresses that companies can often only help if you get in touch with your supplier to tell them you are unable to pay.