Household energy bills are expected to increase by 1% in October despite lower wholesale costs.
That’s according to latest forecasts by Cornwall Insight, which predicts the price cap will rise to £1,737 a year for a typical dual fuel consumer this winter.
That’s a £17 – or 1% – increase from the Ofgem’s current price cap, which is set at £1,720 per year.
The regulator is scheduled to announce the official cap next week.
Cornwall Insight suggests the forecast reflects upcoming changes that Ofgem will introduce in the cap period between October and December 2025, including the expansion of the Warm Home Discount (WHD) scheme for vulnerable households which was announced by the government in June.
That adds around £15 to a typical bill while also providing support worth £150 for 2.7 million people.
It suggests wholesale gas and electricity prices have been volatile over the observation window, largely reflecting geopolitical factors as well as legislative developments from the EU, however, the general trend has been downwards.
“Dr Craig Lowrey, Principal Consultant at Cornwall Insight: “News of higher bills will not be welcomed by households, especially as winter approaches. 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.”
“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. Longer term, Ofgem’s review of how Britain’s energy system costs are distributed could reshape the financial burden on consumers but while some may see savings, others could face higher charges.”
He adds “the real hope for lasting relief lies in the longer term transition towards clean power and energy independence”, suggesting it offers the greatest prospect of both stability and lower costs.
However the transition “won’t be instant or effortless and will see costs incurred as a result”. It will, in addition, require adaptation and significant upfront investment.
A Department for Energy Security and Net Zero spokesman has been quoted as saying: “The only way to bring down energy bills for good is with the government’s clean energy superpower mission, which will get the UK off the rollercoaster of fossil fuel prices and on to clean, homegrown power that we control.
“We are taking urgent action to support families this winter – in addition to expanding the £150 Warm Home Discount to 2.7 million more households, we are strengthening customer protections, including by giving people quicker and easier access to automatic compensation when their suppliers let them down.”
Cornwall Insight’s forecast expects a “small drop” in the price cap next January, however, this is subject to geopolitical movement, weather patterns, changes to policy costs and the potential introduction of new policy costs such as investment support for new nuclear.
