Millions of UK households are bracing for yet another increase in their energy bills this October, despite a backdrop of falling wholesale costs and persistent promises of relief from government and industry leaders. According to new forecasts released by Cornwall Insight on August 19 and reiterated in subsequent reports, the typical annual energy bill is set to rise by around 1%, nudging the average cost from £1,720 to £1,737. This comes at a time when many families are still grappling with the aftershocks of the energy crisis that began several years ago, and the news has sparked a chorus of criticism from consumer advocates, industry experts, and political campaigners alike.
Ofgem, the UK’s energy regulator, is scheduled to confirm its new price cap on August 27, 2025. The cap determines the maximum price that energy suppliers can charge for each unit of energy consumed by households in England, Scotland, and Wales. While it is intended as a safeguard against runaway costs, the cap does not limit the total bill, which still depends on individual usage. The latest forecast marks a reversal from July, when Cornwall Insight had predicted a 1% drop in bills, citing easing tensions in the Middle East. However, recent volatility in electricity and gas prices—driven largely by geopolitical uncertainty, including wavering US trade policy—has upended those expectations.
Simon Francis, coordinator of the End Fuel Poverty Coalition, voiced the frustration felt by many, saying, “We’re about to face our fifth winter of the energy bills crisis, with the average family still paying hundreds of pounds more than they did just a few years ago.” He pointed to the enduring impact of gas prices, which, he noted, “tripled at the height of the crisis and are still 81% higher than before.” Francis also highlighted the declining output from the North Sea, once a cornerstone of the UK’s gas supply, which is now “in terminal decline and it simply cannot provide power for our heating systems for the long term.” He argued that the only sustainable solution lies in moving beyond gas and slashing the cost of clean electricity.
The upcoming price cap hike is not just a story of market forces. Cornwall Insight’s analysis attributes a significant portion of the increase to policy changes, particularly the expansion of the Warm Home Discount scheme. This adjustment will add about £15 to the typical bill but is expected to provide £150 in support to an additional 2.7 million vulnerable households. Dr Craig Lowrey, principal consultant at Cornwall Insight, explained, “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.”
For customers of major suppliers such as British Gas, EDF, EON, Ovo, and Octopus, the impact of these changes could be even more acute. According to projections reported by several outlets, these customers may find themselves paying as much as £300 more per year compared to the period before the Labour Party took office in the summer of 2024, should the price cap continue to rise. This discrepancy has become a flashpoint in the ongoing debate over the government’s handling of the energy crisis.
Jonathan Bean, policy and parliament lead at Fuel Poverty Action, didn’t mince words: “We’re being ripped off. High energy prices result from the complete failure of Ofgem and the Government to clamp down on huge profits and money wasted on marketing, bonuses and CEO salaries. Labour promised a £300 bill saving in their manifesto. Instead, they’ve allowed energy bills to increase since the election. It’s not good enough.”
Critics like Francis and Bean argue that the government missed an opportunity to fund expanded support for struggling households by targeting the “billions of pounds energy networks have generated in excess profits.” Instead, they say, consumers are left to shoulder the burden, even as the government touts its efforts to expand the Warm Home Discount and work with Ofgem on a debt relief scheme. A spokesperson for the Department for Energy Security and Net Zero defended the government’s actions, stating, “The only way to bring down energy bills for good is with the Government’s clean energy superpower mission. Wholesale gas makes up the majority of households’ energy bills, so we must get off the rollercoaster of fossil fuel prices and shift to cleaner, homegrown power we can control.” The spokesperson added that over six million households would benefit from the expanded discount this winter.
Yet, as Dr Lowrey pointed out, the price cap is influenced by more than just the cost of gas or electricity on global markets. “This immediate challenge underscores a broader uncertainty facing millions of households, with current forecasts suggesting a sharp drop in bills is unlikely in the near term,” he said. Looking further ahead, Ofgem is reviewing how the costs of Britain’s energy system are distributed, a move that could eventually reshape the financial burden on consumers. However, Lowrey cautioned that while some households may see savings, others could face even higher charges, depending on how the changes are implemented.
Underlying all of this is the complex web of factors that determine what people pay for energy. Matt Oberle, an energy expert at Utility Rates, explained that many suppliers “locked in higher wholesale rates during periods of extreme volatility in 2022 and 2023. These hedged positions ensure financial stability for suppliers but delay the pass-through of lower prices to consumers.” He also noted that network charges, policy levies, and supplier operating costs have all risen over the past five years. “For example, renewable energy subsidies and the cost of decarbonisation programmes are now embedded in domestic tariffs.”
Francis highlighted the stark difference in generation costs, stating, “The cost of a gas-fired power station is around £114 per megawatt hour compared to around £44 for offshore wind and £41 for solar. We’ve been trying to get the Government to end this ‘marginal pricing’ issue—we’re unsure if they’re considering this.” This so-called marginal pricing system means that the highest-cost generator sets the market price, often resulting in higher bills for consumers even when cheaper renewable sources are available.
Cornwall Insight’s forecast does offer a glimmer of hope: a small drop in the price cap may come in January 2026. But, as the consultancy warns, this is far from guaranteed and depends on a range of unpredictable factors, including geopolitical developments, weather patterns, and policy changes—such as potential costs to support new nuclear generating capacity.
For now, experts are urging households to shop around for better deals and to take advantage of any available support programs. But as the country heads into a fifth winter of high energy costs, the sense of frustration is palpable. The path to lower bills, many agree, lies not in short-term fixes, but in a decisive shift toward clean, homegrown energy and a system that prioritizes affordability and security for all.
With the next Ofgem announcement just days away, millions will be watching closely, hoping for relief—but bracing for yet another round of tough choices as the cold months approach.
