Energy prices set to rise in October – how to reduce your gas and electricity bill

Energy bills are set to rise again, but there are ways to cut your gas and electricity costs.

Typical energy bills could rise by 9% in October when the next Ofgem energy price cap is announced, according to forecasts from analysts at Cornwall Insight.

The organisation has warned that gas and electricity wholesale prices have "rebounded" from their 30-month lows, becoming a "key driver behind the forecast uptick in bills".

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This increase would add almost £150 per year to typical bills, said The Telegraph, heaping "further pressure on millions of pensioners set to lose their winter fuel payments".

What is the energy price cap?

The energy price cap is set by industry regulator Ofgem.

It is the maximum that energy suppliers can charge customers for each unit of energy and standing charge they use on a standard variable tariff. 

The limit was introduced in 2019 due to "concerns that customers were paying a 'loyalty penalty,'" said the Energy Saving Trust.

The cap is based "largely on wholesale energy prices", said MoneySavingExpert, and applies to providers' standard and default tariffs, "which the vast majority of households are now on".

The price cap rose as wholesale prices increased in the aftermath of the pandemic in 2021 and Russia's invasion of Ukraine in 2022.

It has since fallen and there were some competitive fixed tariffs earlier this year, said MoneyWeek, but "the situation has changed again" and finding a fixed deal to beat the increase in the energy cap is unlikely.

What is happening with energy bills?

Ofgem will confirm the next energy price cap by 27 August.

Cornwall Insight, "widely regarded for its accurate predictions", said BBC News, has forecast that it will rise to £1,714 a year from October – a £146 annual rise.

It would be the first increase since January last year, said The Times, when the price cap hit a "historic high" of £4,279.

Cornwall Insight is expecting a "modest increase" in January as well.

Dr Craig Lowrey, principal consultant at Cornwall Insights, said this was "not the news households want to hear when moving into the colder months". 

"The lingering impact of the energy crisis has left us with a market that's still highly volatile and quick to react to any bad news on the supply front," he said.

"Despite this, while we don't expect a return to the extreme prices of recent years, it's unlikely that bills will return to what was once considered normal. Without significant intervention, this may well be the new normal".

How to reduce your energy bill

Using less energy at home helps our wallets, said MoneySuperMarket, and "also benefits the environment by reducing our carbon footprint".

One of the "simplest ways" to save energy is to switch to efficient gadgets and appliances, said the comparison website, such as swapping traditional light bulbs for "energy-saver alternatives" and finding appliances with an A+++ rating.

The "easiest way" to save energy and reduce your bill, said SaveMoneyCutCarbon, is to switch off or unplug devices when not in use, "plugging them back in just as you are about to use them". 

Insulating your home and draught-proofing any gaps "can keep it both warm in the winter and cool in the summer", said CompareTheMarket, plus it could "cut your energy bills by almost half".

Additionally, you may not feel the difference if you lower your thermostat by a few degrees, added the comparison website, "but you might notice a decrease in heating costs".