Ofgem Energy Price Cap to rise by 2 per cent in October

Latest figures show more than a third of customers (37%) are now on fixed tariffs, which means they are protected from the upcoming rise.

Tim Jarvis, director general of markets at Ofgem, said: “While there is still more to do, we are seeing signs of a healthier market.

“There are more people on fixed tariffs saving themselves money, switching is rising as options for consumers increase, and we’ve seen increases in customer satisfaction, alongside a reduction in complaints.

“While today’s change is below inflation, we know customers might not be feeling it in their pockets.

“There are things you can do though – consider a fixed tariff as this could save more than £200 against the new cap.

“Paying by direct debit or smart pay-as-you-go could also save you money.

“In the longer term, we will continue to see fluctuations in our energy prices until we are insulated from volatile international gas markets.

“That’s why we continue to work with Government and the sector to diversify our energy mix to reduce the reliance on markets we do not control.”

The increase has sparked fears that many families and older people may struggle to heat their homes if there is a cold winter.

The energy price cap will rise to £1,755 from 1 October, a rise of £35. Many households will be concerned that costs are going up just as the colder weather hits and they need to use more energy. pic.twitter.com/1kZX4pzVeL

— National Energy Action (@NEA_UKCharity) August 27, 2025

The rise, which comes as the winter months approach, is higher than the 1% increase predicted by experts Cornwall Insight last week, and means the average energy bill of a household that has still not signed up to a fixed tariff will rise to £1,755 a year from the current £1,720.

Energy minister Michael Shanks said: “We know that any price rise is a concern for families.

“Wholesale gas prices remain 75% above their levels before Russia invaded Ukraine. That is the fossil fuel penalty being paid by families, businesses and our economy.

“That is why the only answer for Britain is this government’s mission to get us off the rollercoaster of fossil fuel prices and onto clean, homegrown power we control, to bring down bills for good.

“At the same time, we are determined to take urgent action to support vulnerable families this winter. That includes expanding the £150 warm home discount to 2.7 million more households and stepping up our overhaul of the energy system to increase protections for customers.”

Gillian Cooper, director of energy at Citizens Advice, said: “Today’s announcement means the price cap will remain drastically higher than before the energy crisis. With millions of households already in debt as the colder months draw in, this news offers no comfort.

“The Government has made welcome changes to expand the number of people who’ll receive support with their energy bills this winter, but it’s not enough to turn the tide. Our advisers are bracing for more calls as people struggle to top up their meters and pay the gas bill.

“It’s high time for decisions about the longer term. The Government must set out plans for how it will support the households struggling the most over the coming years and also prioritise investing in energy upgrades for millions of homes, to reduce costs and keep money in people’s pockets.“

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.

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.

Recommended reading:

• How to save on energy bills as Energy Price Cap increases by 2 per cent
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• Martin Lewis shares 'crucial need to know' energy bill rules

How can you beat the Energy Price Cap?

Tom Lyon, Director at Compare the Market says: "With colder weather round the corner, many families will likely be looking for ways to save on their bills in advance of their energy consumption rising. Comparing prices online can be helpful when attempting to weigh up the many different tariffs on offer. It’s worth checking whether the tariffs you consider are below the energy price cap, and if the energy supplier has a good reputation for customer service.  

"Another important consideration is whether you might want to switch to a fixed rate deal to secure some protection against uncertainty surrounding future price cap announcements.

"Some forecasters have suggested energy prices could rise in autumn after initial predictions suggested they could drop. The launch of new fixed rate deals, which fix the unit price of energy for a set period, can help to simplify budgeting and could allow households to find deals below the energy price cap. If you’re thinking of switching, you might also want to consider whether the supplier charges exit fees if you leave the tariff early."