ENERGY bills will rise by 4% to their highest level in three years in a fresh blow for millions of households this winter.
The energy regulator Ofgem has confirmed the new price cap, which comes into effect on October 1.
In just a few weeks the cap will rise from its current rate of £1,862 to around £1,922 a year – an increase of £60.
The increase will be equivalent to £5 a month for an average household that use both gas and electricity and pay via direct debit.
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The price cap limits how much suppliers can charge you for each unit of gas and electricity use use.
Neil Kenward, Ofgem’s director general for markets, said: “High international gas prices are continuing to drive energy costs in the UK.
Read more on energy bills
URGENT WARNING
Households urged to take action to save over £200 on their energy bills
“We welcome the Government’s intervention to remove VAT from electricity bills, without which customers would have faced even higher costs this winter.”
The news will come as a fresh blow to households who will increase their energy usage in the colder months, pushing up their bills further.
Energy Secretary Miatta Fahnbulleh said: “Families will be understandably concerned about the cost of energy bills this winter, which is being driven up by the Iran War.
“Energy is an everyday essential and it needs to be affordable for everyone, which is why we have cut VAT on electricity bills from October, to give families some breathing space.
“This has limited the rise in the price cap and follows the £150 in costs we removed from bills earlier this year, and we will keep looking at what more we can do to protect families from unaffordable bills.”
The Government has announced plans to cut the VAT on energy bills from October 1 in a bid to bring household bills down.
The move is expected to save households around £45 a year, although experts suggest this will be largely wiped out by higher energy costs.
Should you lock into a fixed deal?
A fixed energy tariff can give you security that your bill will not be affected by changing market conditions.
By locking into a fixed tariff you can be sure of how much you will pay for the duration of your deal.
But if energy prices come down you will still have to pay the price you agreed at the start of your contract.
Meanwhile, there may be an exit fee if you want to leave your contract early.
You could save around £100 or more by locking into a fixed deal, according to Ofgem.
Meanwhile, many suppliers offer tariffs with cheaper electricity to smart meter customers for electricity used outside of peak times.
Read the terms and conditions carefully and speak to your supplier if any of the information is unclear.
Use a comparison website such as Uswitch or MoneySuperMarket to compare the deals on offer.
How to save on your energy bills
SWITCHING energy providers can sound like a hassle – but fortunately it’s pretty straight forward to change supplier – and save lots of cash.
Shop around – If you’re on an standard variable tariff you are likely to be throwing away over £200 a year.
Simply use a comparison site such as MoneySuperMarket.com, uSwitch or EnergyHelpline.com to see what deals are available to you.
The cheapest deals are usually found online and are fixed deals – meaning you’ll pay a fixed amount usually for 12 months.
Switch – When you’ve found one, all you have to do is contact the new supplier.
It helps to have the following information – which you can find on your bill – to give the new supplier.
Your postcode
Name of your existing supplier
Name of your existing deal and how much you pay
An up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won’t be interrupted in that time.
