October average energy bill up £149 per year in UK households

We’re likely to see the average household energy bill rise by £149 per year throughout the month of October due to the new price cap.¹

Predictions are that those using typical levels of gas and electricity will pay £1,717 a year, spelling a 10% increase compared with prices right now.¹

The cap is set by Ofgem, the energy regulator, and impacts the unit price for gas and electricity used in 27 million homes throughout England, Scotland and Wales.

The fluctuating price of energy

Whilst energy costs remain lower than last year, they are still way higher than pre-Covid levels. And the increase has come at a time when the government has changed winter fuel payments, meaning support will stop for 10 million pensioners throughout England and Wales.

In Northern Ireland and Scotland, the payment is a decentralised matter. Scotland will no longer afford it to all pensioners.  

April and July saw prices fall, however they are predicted to rise again, by around £12 per month for an average user, as we head into winter.¹

Throughout the autumn months, households can expect to pay an additional 10% on top of their current yearly bill.¹  

Whilst bills will be around £117 cheaper for the average household than in October 2023, it’s predicted that we’ll see another increase in January.¹

Why do prices keep changing?

Ofgem puts the increased price cap down to higher international energy market prices, in part because of heightening geopolitical tensions; and partly due to extreme weather, which is stimulating competition and the call for gas, which affects the price of wholesale electricity.   

With standing charges increasing by one pence a day, both for gas and electricity, Ofgem is contemplating the system and how to help those who are most vulnerable.

What the changes mean

Gas prices are going to be capped at 6.24p per kilowatt hour (kWh), and electricity at 24.5p per kWh - up from 5.48p and 22.36p respectively now. Average household usage is 2,700 kWh of electricity annually, and 11,500 kWh of gas.¹

The average bill of homes on prepayment meters will be £1,699, a little less than those paying by direct debit. Those paying by cash or cheque on a three-monthly basis will pay more – typically £1,829.¹

Standing charges will rise to 61p a day for electricity and 32p a day for gas, compared to 60p and 31p respectively now. Though they will vary regionally.¹

Those who already owe their supplier and larger homes are among those likely to be most affected.

The new standing charges overhaul is designed to allow homeowners to save money by using less energy.

Help may be at hand

There is support for some pensioners. Pension credit is typically worth £3,900 per year and those who qualify can claim for more financial support, including winter fuel payments. It is estimated that 880,000 eligible pensioner households aren’t currently claiming it.¹

Sources
1.    https://www.bbc.co.uk/news/articles/c9qgy11w5dyo

All the information in this article is correct as of the date of publishing. The opinions expressed in this publication are those of the authors Euxton Mortgage Market. The information provided in this article, including text, graphics and images does not, and is not intended to, substitute advice; instead, all information, content and materials available in this article are for general informational purposes only. Information in this article may not constitute the most up-to-date legal or other information.

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September 2024