Key facts
- Households in Great Britain will face higher energy charges from October 1 due to a 4% rise in the government's price cap.
- Switching to a fixed energy tariff could save consumers up to £173 per year, offering protection against predicted future price increases.
- The new price cap will set the typical annual energy bill at £1,723.
- Analysts predict a further 9% increase in energy bills in January, potentially raising the average annual cost to £1,872.
- A temporary VAT cut on domestic electricity will save households £45 annually until March 2027.
- The Warm Home Discount scheme will provide a £150 discount on electricity bills starting in October.
Millions of households in Great Britain are bracing for higher energy costs as the government's price cap is set to increase again in October, marking the second rise in three months. The energy regulator, Ofgem, has advised consumers that switching to a fixed tariff could lead to annual savings of £100 or more compared to the new cap. Specifically, a fixed deal from Fuse Energy is available at £1,550 per year for a typical household, which is £173 less than the projected October cap and £113 below the current cap.
The new price cap, effective October 1, will raise gas and electricity prices by 4%, bringing the typical annual bill to £1,723. This increase comes as many households will be turning on their heating for the colder months. Analysts at Cornwall Insight predict further pain, forecasting an additional 9% rise in January, which could add £149 to the average annual bill. However, these January figures are subject to confirmation in November.
Approximately 11 million households are already protected by fixed tariffs and will not be affected by the upcoming price adjustments. For those considering a switch, price comparison websites highlight numerous fixed deals that undercut the new October price cap, offering consumers certainty over their energy costs. It is advised to check remaining contract terms and potential exit fees before switching.
In addition to switching tariffs, a temporary cut in VAT on domestic electricity from 5% to zero, effective from October 1 to March 31, 2027, will provide a saving of £45 per year for typical households. This VAT reduction will be automatically applied by suppliers. Furthermore, the Warm Home Discount scheme will reopen in October, offering a one-off £150 discount on electricity bills to eligible customers. Ofgem also suggests inquiring about smart meter tariffs that offer cheaper rates for off-peak electricity consumption.