Nearly 10 million households have been alerted to the risk of overpaying for their energy if they fail to provide meter readings to their supplier before a 10% price hike comes into effect on October 1. The average household energy bill is set to rise by £149 annually from Tuesday as Ofgem raises its price cap, coinciding with the onset of the colder months.
The regulator has increased the cap from the current £1,568 for a typical dual fuel household in England, Scotland and Wales to £1,717, translating to roughly £12 more per month on average bills. This latest cap will be just 6% or £117 lower than it was during the same period last year.
Households on a standard variable tariff (SVT) – as opposed to a fixed deal – and those without a smart meter are advised to submit their electricity and gas readings to their supplier as close to October 1 as possible. This ensures that any energy consumed before this date is not inaccurately billed at the higher rates.
Suppliers who have not received meter readings base their bills on estimated usage, which could result in some households overpaying, while others may underpay.
The price cap sets a maximum price that energy suppliers can charge consumers for each kilowatt hour (kWh) of energy they use. It does not limit total bills because householders still pay for the amount of energy they consume.
From October 1, households on a standard variable tariff that pay for their electricity by direct debit will pay on average 24.5p per unit, with a standing charge of 60.99p per day.
For gas, the average will be 6.24p per unit with a standing charge of 31.66p per day. Ofgem said rising prices in the international energy market, due to heightened political tensions and extreme weather events, were the main driver behind the decision.
Millions of pensioners are also facing a winter with less support after the new Government decided to scrap winter fuel payments for those who do not receive pension credits or other benefits. About 10 million pensioners will miss out on the payments of up to £300 this year.
October’s price cap will be significantly lower than during the peak of the energy crisis, which was fuelled by Russia’s invasion of Ukraine in February 2022, driving up costs in an already-turbulent market. However, experts think there is likely to be a further increase in January, with more rises possible early in the new year due to escalating tensions in the Russia-Ukraine war.
Ofgem’s chief executive, Jonathan Brearley, has encouraged consumers to “shop around” and consider a fixed-rate tariff that could save them money. He added that the regulator was collaborating with the Government, suppliers, charities, and consumer groups to do “everything we can” to support customers.
Citizens Advice expressed particular concern for households with children and young people, as well as those on lower incomes, who are most likely to struggle with their heating costs. Uswitch.com estimated that the average household on an SVT is expected to spend £135 on energy in October compared with £55 in September due to a combination of higher rates and increased usage at the start of autumn.
Uswitch energy spokesman Ben Gallizzi advised: “With energy prices rising next week, it’s vital that households submit a meter reading, with a £19 difference between the cost of a week’s energy at September’s prices compared with October. Customers who don’t have a smart meter should aim to submit their readings before or on Tuesday, October 1, so their supplier has an updated – and accurate – view of their account.”
He further warned: “If you delay submitting your readings, some of your September energy usage could end up being estimated and therefore charged under the higher October rates. Try making this task a monthly habit for billing accuracy. Households are also advised to see whether now is the time to change their energy tariff, to beat the October price hikes.
“There are a number of fixed tariffs worth considering right now. By opting for a fixed deal, you’re locking in those rates for the duration – usually 12 months – which means households could have price certainty and avoid the ups and downs of the price cap.”
