Millions of UK households are set to face higher energy bills from October after Ofgem announced a 4% increase in its price cap, driven largely by rising wholesale gas prices.

Household energy bills across the UK are set to reach their highest level in three years after regulator Ofgem announced that its price cap will increase by 4% from 1 October.

The increase will add around  £60 a year, or £5 a month, to the bill of a typical household using both gas and electricity, taking the annual figure to approximately £1,723 if the level were maintained for a full year.

Ofgem said higher wholesale gas prices, linked to the conflict involving Iran, were the main factor behind the increase. However, around **35% of households, or approximately 11 million homes, are now on fixed-rate tariffs**, meaning their prices will not be directly affected by the new cap.

The increase will take effect as temperatures begin to fall, raising concerns about the financial pressure facing households during the winter months.

Government Support and Political Reaction

The government has highlighted measures designed to reduce the impact of higher energy costs. Energy Secretary Miatta Fahnbulleh said the temporary removal of VAT from energy bills for six months from October would save households around £45.

The government has also said that the  Warm Home Discount will provide £150 of support to around six million households this winter.

Fahnbulleh acknowledged that many families remain under significant cost-of-living pressure, saying the government was working to provide additional support.

Opposition parties, however, argued that the government needed to do more to reduce energy costs. Shadow Energy Secretary  Claire Coutinho said Labour had failed to deliver on its previous promise to reduce household energy bills.

Liberal Democrat energy spokesperson Pippa Heylings  also called for stronger action, arguing that the scale of the challenge required significant changes to bring bills down.

Former Prime Minister Gordon Brown has suggested introducing a tax on the gambling industry and using the revenue to support households struggling with energy costs. He has also called for consideration of a long-term social tariff for energy.

 Fixed Tariffs Offer Potential Savings

Ofgem's price cap applies to around 22 million households in England, Wales and Scotland whose tariffs are affected by the cap.

The regulator stressed that the cap sets a maximum price for each unit of gas and electricity rather than limiting the total amount a household can be charged. Actual bills therefore depend on how much energy each household uses.

Ofgem said households could potentially save money by switching to fixed-rate deals. Its market director, Neil Kenward, said some fixed tariffs were available at more than £100 below the October price-cap level.

The regulator also recently revised its estimate of typical household energy consumption. Its latest figures assume annual use of approximately 9,500 kWh of gas and 2,500 kWh of electricity, reflecting improved energy efficiency and reduced consumption in recent years.

Wholesale Gas Prices Drive Increase

Wholesale energy costs, which account for more than a third of a typical dual-fuel bill, have been the main driver of the latest price increase.

According to Energy UK, the average wholesale gas price over the previous three months was significantly higher than during late 2025. The increase has contributed to continued pressure on household energy costs.

Although more consumers have switched to fixed tariffs, average energy bills remain substantially higher than before the energy crisis triggered by Russia's full-scale invasion of Ukraine in 2022.

The prolonged period of high prices has also contributed to a sharp rise in household energy debt. Energy UK estimates that total outstanding energy debt has reached around £6 billion** and could rise to approximately  £7 billion by the end of 2026.

The organisation has called for a flexible discounted energy tariff for households most in need, with funding provided through taxation. Several debt charities have supported the proposal.

Rising Debt Adds to Household Pressure

Debt charities are warning that more households are struggling to keep up with essential costs.

StepChange said the people seeking help increasingly have significant energy debts, with average energy arrears estimated at around £2,600, in addition to other financial commitments.

The charity has also backed calls for a social energy tariff and warned that some households are increasingly relying on credit to cover basic expenses.

Consumers concerned about their ability to pay are being advised to review their household budgets, monitor their energy consumption and check whether their bills are based on accurate meter readings.

Energy suppliers also offer a range of support schemes for customers experiencing financial difficulties. Households expecting problems with payments are encouraged to contact their supplier as early as possible to discuss available assistance.

With the October price-cap increase approaching, the combination of higher wholesale gas prices, rising household debt and colder weather is likely to keep energy affordability at the centre of the UK's cost-of-living debate.