Household energy bills are set to rise by around 1% in October despite lower wholesale costs, according to new forecasts by Cornwall Insight.
Ofgem, which sets the limit on what energy companies can charge customers, is set to confirm its latest price cap on August 27. This is again prompting experts to urge households to shop around for a better deal.
The typical household energy bill is expected to rise by £17 to £1,737 per year when regulator Ofgem’s new price cap comes into force, experts at Cornwall Insight have predicted.
The latest prediction is a turnaround from its previous forecast in July that bills would drop by 1% from the current £1,720 in October due to easing Middle East tensions.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: "We’re about to face our fifth winter of the energy bills crisis, with the average family still paying hundreds of pounds more than they did just a few years ago.
"One of the main culprits is the price of gas, which tripled at the height of the crisis and is still 81% higher than before.
"What's more, the North Sea, once seen as the nation's source of gas, is in terminal decline and it simply cannot provide power for our heating systems for the long term. If we want affordable, secure energy, we have to look beyond gas and slash the cost of clean electricity."
Forecasts suggest Ofgem’s October price cap will nudge up by around 1% to £1,737 (about +£17).
— End Fuel Poverty Coalition (@EndFuelPoverty) August 19, 2025
That means a fifth winter of the energy bills crisis, with families still paying far more than a few years ago.
The core problem is gas: prices tripled at the peak and remain around… pic.twitter.com/bHbWbMhF4t
Cornwall Insight said its forecast reflected changes it assumed Ofgem would be introducing in the upcoming cap period, including the expansion of the Warm Home Discount scheme for vulnerable households that would add around £15 to a typical bill, while also providing £150 in support to 2.7 million additional people.
However, it also noted that wholesale prices for electricity and gas had been “volatile”, largely reflecting geopolitical factors including uncertainty over US trade policy.
Cornwall Inisight said it expected a small drop in the price cap in January, but this was dependent on geopolitical movement, weather patterns, changes to policy costs and the potential introduction of costs such as those to support investment in new nuclear generating capacity.
Dr Craig Lowrey, principal consultant at Cornwall Insight, commented: “News of higher bills will not be welcomed by households, especially as winter approaches.
📢 Final October Price Cap Forecast Released.
— Cornwall Insight (@CornwallInsight) August 19, 2025
Our final forecast for October predicts the energy price cap will rise to £1,737 annually for typical dual fuel household this winter - an increase of £17 and 1% from current levels.
What is impacting the cap?
📈 Expansion of the… pic.twitter.com/beE6EBHnMq
“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.
“The real hope for lasting relief lies in the longer-term transition towards clean power and energy independence, which offers the greatest prospect of both stability and lower costs.”
Recommended reading:
-
New regional energy pricing could increase prices in these areas
-
Martin Lewis shares 'crucial need to know' energy bill rules
What is the Energy Price Cap?
Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.
The energy price cap was introduced by the Government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales 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.
Share