Typical annual household energy bills in the UK are forecast to rise to £1,729 in October, marking a 4% increase from the current £1,663 level, according to a respected projection by Cornwall Insight. This forecast applies to households on standard variable tariffs, which are typically used by those who have not fixed their energy rates for at least a year.
The energy price cap, set by regulator Ofgem, limits the cost per unit of energy. The £1,729 figure is an average based on typical household consumption, and individual bills will vary based on usage. Cornwall Insight is expected to release its final prediction before Ofgem announces the official new cap on August 26.
The anticipated rise in energy costs is attributed to the ongoing conflict in the Middle East, which has driven wholesale gas prices to their highest point in nearly four years. This situation has also contributed to inflation, which accelerated to 2.9% in July. Cornwall Insight anticipates further increases for the price cap in January, suggesting that elevated energy costs will persist through the winter months.
Experts advise consumers to evaluate their current energy tariffs. Richard Neudegg, director of regulation at price comparison website Uswitch, noted that households remaining on standard tariffs could face significantly higher costs, with gas prices potentially 26% higher than the previous year. Energy suppliers have also released their own predictions, with British Gas forecasting an increase to £1,730 and EDF Energy to £1,722.
It is important to note that Ofgem updated its typical energy consumption values in July to reflect reduced household usage. While this adjustment has lowered the announced price cap figures compared to earlier predictions—for instance, the July price cap was previously stated as £1,862 but is now £1,663 under the new rates—this reflects changes in behavior due to higher costs rather than a reduction in energy prices themselves.
Consumers who have not fixed their energy bills for over a year are encouraged to explore whether switching to a fixed tariff could offer savings. Uswitch suggests that the best fixed deals currently available are approximately 12% cheaper than the projected price cap, with the lowest priced option at £1,522 for a typical home. Fixed tariffs provide cost certainty and protection against market fluctuations.
Consumers can compare fixed-rate deals through comparison sites like Uswitch and MoneySupermarket. Smaller energy suppliers often feature prominently in the best deals, although some larger providers, such as Eon Next, have also offered competitive fixed rates recently.