Ofgem is a government regulator that sets out how much bills can go up – and down (Picture: Getty Images)
Energy bills will go up by 10% in October, meaning 28.4million households will be paying about £149 more a year.
Ofgem, the energy regulator, determines how much utility companies can charge customers – the maximum suppliers can charge is known as the energy cap.
The cap, expressed in terms of how much the average home would pay, has risen from £1,568 to £1,717, Ofgem announced today.
This cap will be in effect from October 1 to December 31 as Ofgem announces a new cap every three months.
One reason for the price increase, Ofgem says, is that the wholesale price of energy has risen.
Wholesale costs are paid by suppliers and have risen by about 20% in the last few months largely due to Russia’s invasion of Ukraine, according to experts.
To reflect that, wholesale costs will represent about 43% of a typical bill – from £613 last quarter to £736.
Ofgem officials whip out their calculators every few months to ensure people pay a ‘fair price and to protect against overcharging’.
But campaigners worry that, amid a years-long cost of living crisis, seeing yet more of their bills going up is not the news people wanted to read about this morning.
This price hike is yet another blow to the 6,500,000 in fuel poverty who, like every other bill payer in the UK, are still forking out 65% more than they did for their energy than at the start of the crisis,’ said Fiona Waters of the anti-poverty charity Warm This Winter.
‘Meanwhile, energy companies have been profiteering, making more than £470,000,000,000 since 2020. That shows there is money in the system but that is going to energy bosses and their shareholders when it needs to go to ordinary people.
‘Today just highlights the Government’s policies on renewables and energy efficiency are needed to mend this broken system but we also need help now to get everyone of all ages through the winter ahead.’
Although it’s called a ‘price cap’ this isn’t a cap on how much your bills will be.
Campaigners worry that today’s price cap news is just yet another blow for those in fuel poverty (Picture: Getty Images)
Most homes won’t pay bang-on £1,717 a year as the figure is based on average energy use.
Bills can very much exceed or fall well below this estimate and vary depending on energy use, location and the type of metre someone has.
Ofgem (Office of Gas and Electrical Markets) does the maths to figure out what energy suppliers can charge people.
This includes setting the price per unit of electricity and natural gas and slipping other charges into the bill like operating costs, maintenance fees and subsidies for clean energy.
From October 1, the unit rate for electricity will be 24.50p per kilowatt-hour, for a standing charge of 60.99p per day – this is the fixed daily fee you pay, even if you use no electricity.
Gas, meanwhile, clocks in at 6.24kWh and now has a standing charge of 31.66p per day.
Got a story? Get in touch with our news team by emailing us at webnews@metro.co.uk. Or you can submit your videos and pictures here.
For more stories like this, check our news page.
Follow Metro.co.uk on Twitter and Facebook for the latest news updates. You can now also get Metro.co.uk articles sent straight to your device. Sign up for our daily push alerts here.