Millions of households across England, Scotland, and Wales are bracing for yet another uptick in their energy bills this autumn, as the UK’s energy regulator Ofgem has announced a 2% increase to the energy price cap. The adjustment, set to take effect from October 1, 2025, will see the average annual bill for a typical household rise from £1,720 to £1,755—a jump of £35 per year, or about £2.93 a month, according to the BBC.
This latest increase, which is slightly higher than analysts had predicted, comes at a time when families are already grappling with the soaring cost of living. The British Retail Consortium recently reported that food prices are climbing at their fastest rate since February of last year, with everyday staples like chocolate, butter, and eggs leading the charge. For many, the prospect of higher energy bills as colder months approach is a daunting one.
Ofgem’s price cap sets the maximum price that energy suppliers can charge per unit of gas and electricity, but the total bill each household pays still depends on their usage. For those trying to estimate the impact, the BBC suggests adding £2 for every £100 currently spent on energy annually. The cap, reviewed quarterly, is designed to reflect changes in wholesale energy costs, but this time, the rise is attributed in part to factors beyond just the market price of gas and electricity.
One of the main drivers of the increase is the government’s decision to extend the Warm Home Discount—an initiative that provides £150 off winter bills for those on means-tested benefits. This extension, which has broadened eligibility by removing previous property size restrictions, will be funded by all billpayers through higher standing charges, not just those who benefit directly. About £1.42 of the monthly increase will go toward this support, while another £1.23 will fund efforts to ensure a stable electricity supply, including the costs associated with balancing the grid—like switching wind farms on and off or firing up gas plants when renewable sources can’t meet demand. Fixed costs to operate the gas network have also crept up, adding another 72p per month.
Standing charges—the daily fixed fee for being connected to the energy supply—are set to rise as well. The BBC reports that electricity standing charges will typically increase by 4%, while gas will jump by a hefty 14%, moving from 29p to 34p per day. These changes, though seemingly small on a daily basis, add up over the year and hit hardest during the winter months when energy usage peaks.
For those on fixed-price deals, there’s a silver lining: more than a third of households are now protected from the price cap’s fluctuations, with their rates locked in for a year regardless of market changes. Tim Jarvis, Ofgem’s director general of markets, told the BBC this is a sign of a “healthier market,” though he acknowledged that the price rise will still be felt by many. He advised consumers to consider switching to direct debit payments, which can offer savings over standard credit billing.
But for millions, especially those not on fixed deals, the increase is yet another blow. Around 20 million households pay by direct debit, while eight million use standard credit, and six million rely on prepayment meters, often associated with higher costs and more financial vulnerability.
Small businesses are feeling the pinch, too. April, a hair salon owner who appeared on GB News, described the “massive knock-on effect” the energy bill hike will have on her business. “Most of the girls are self-employed… The problem is that I feel like I can’t put their rent up,” she explained. “So then I’m personally sort of taking on that cost, which, 83 per cent in six years, is a massive, massive cost.” Her story is emblematic of the wider challenges faced by small business owners, who must balance rising overheads with the need to remain competitive and support their staff.
Campaigners warn that the cumulative effect of these increases is leaving many households in a precarious position. The End Fuel Poverty Coalition’s Simon Francis told the BBC, “The average family [is] still paying hundreds of pounds more than they did just a few years ago.” He pointed out that many households are also struggling under the weight of £4 billion in energy debt accumulated during previous periods of high prices. For these families, the latest cap increase means yet another winter of tough choices between heating, eating, and other essentials.
Community organizations are stepping in where they can. Parc Primary School in Cwm Parc, Rhondda Valley, has partnered with the Fuel Bank Foundation to provide energy vouchers to low-income families. Leanne Gough, the school’s family engagement officer, described the growing need: “We’ve got a high level of need, and over the last couple of years we’ve seen that more and more. People are really struggling. And not only with the fuel, but life in general. Sometimes you issue a fuel bank voucher and you can see the relief on their face, but it is a short-term [solution]. People are proud, so it takes a lot for them to come to ask. They will do everything they can beforehand.”
The government, which earlier this year reversed course on winter fuel payments, insists it is committed to supporting vulnerable families by expanding the Warm Home Discount. Energy minister Michael Shanks has emphasized the need for more domestically produced clean energy to help bring bills down in the long term. However, Energy UK, representing suppliers, argues that the Warm Home Discount’s expansion should be a temporary fix, and that more targeted support for those most in need would be a better long-term strategy.
The political debate over energy costs continues to simmer. The Conservative Party has blamed rising bills on government policy choices, while Liberal Democrat leader Ed Davey has said, “the last thing” families and pensioners need is higher energy bills this winter. With the cost of living crisis showing no sign of abating, and energy prices set to remain high for at least the next three months, the pressure is on policymakers to find sustainable solutions that offer real relief to struggling households and businesses alike.
As October approaches, millions will be watching their meters—and their wallets—even more closely, hoping that the coming winter doesn’t bring more financial frostbite than they can bear.
