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UK energy bills set for three-year high as price cap rises
A forecast 4% increase in the UK energy price cap from October could erase an average £45-a-year VAT cut on electricity bills.
British household energy bills are expected to reach their highest level in three years this winter, driven by soaring energy market prices linked to the Middle East war and heavier reliance on expensive gas in power generation during European heatwaves, according to analysis by energy consultancy Cornwall Insight.
The government’s energy price cap is forecast to rise by 4% from this October to the equivalent of £1,729 per year through the last three months of 2026, which would hit struggling households, the analysis said.
Cornwall Insight also estimated that the VAT cut promised from October would not offset the underlying increase in wholesale energy costs. It said electricity rates would rise from 26.11p per kilowatt hour to 26.57p, and gas charges would rise from 7.33p to 7.90p for households paying by direct debit.
Ofgem is due to set the next price cap next Wednesday, using the maximum unit prices for gas and electricity based on the costs of supplying energy to homes, including average wholesale market costs in the lead-up months, the outlet said.