Millions of households across England, Scotland and Wales will see their gas and electricity bills rise from October, energy regulator Ofgem has announced.
The energy price cap is set to increase by 2% this autumn, pushing the average annual bill for a typical household to £1,755 – an increase of £35.
This means energy bills will be £713 a year higher than in winter 2020/21, when there was unprecedented energy market uncertainty due to the COVID-19 pandemic.
The energy price cap sets a limit on what suppliers can charge per unit of energy, and while it does not cap the total bill, it provides a cap on unit prices and standing charges.
Within the figures is what campaigners have described as a “hidden” increase in standing charges, which are set to rise by 4% for electricity and a sizeable 14% for gas.
Ofgem sets the maximum standing charge a provider can charge, the fixed daily fees households pay for having access to gas and electricity, regardless of how much they use, which has also increased.
Standing charges will rise by 4% for electricity and 14% for gas. (SOPA Images/LightRocket via Getty Images)
The rise will take effect just as the colder months begin, prompting concern from campaigners who warn that families are facing yet another winter of relatively high energy costs.
Although wholesale energy costs are showing signs of stabilising, the energy market is still vulnerable to a world market which has seen large fluctuations due to US tariffs and the war in Ukraine.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: “Among the hardest hit by the planned price cap rise will be the 12 million households already in fuel poverty.
“Hidden in the detail of the announcement is a 14% increase in gas standing charges while gas unit rates remain almost double pre-crisis levels. And the cost of electricity is also up, which is itself set by the cost of the most expensive generator, usually gas-fired power stations.”
What is the standing charge?
A standing charge is a fixed daily fee included in your gas and electricity bill, which is mandatory even if you use no gas or electric that day.
The standing charge is a cost set by your supplier, and it covers the costs to move electricity or gas through cables and pipes, pay towards supplier business costs, and pay towards some government social and environmental schemes.
Ofgem figures revealed that the average annual electricity standing charge from 1 October to 31 December 2025, when paying by direct debit will go up from £188 to £196.
The average gas standing charge from 1 October to 31 December 2025 when paying by direct debit will go up from £109 to £124.
For those who pay by direct debit, the average annual standing charge will go up, from £296 to £320.
The daily standing charge from 1 October per unit cost for electricity is set to increase from 51.37p to 53.68p, or 25.73p per kWh to 26.35p per kWh.
For gas the standing charge will go up from 29.82p to 34.03p, or 6.33p per kWh to 6.29p per kWh.
Why has the standing charge increased?
Two key reasons have been given for the standing charge price increase: the roll out of the warm home discount and increased network charges.
The warm homes discount, which will reopen in October, will provide 2.7 million households with a £150 reduction in their bills, which will add a total of 7p per day, on average, to standing charges.
Dr Craig Lowrey, principal consultant at energy researchers Cornwall Insight, said for those still facing high bills the discount “will offer little comfort”.
“The rise in bills, however small it may look on paper, will feel very real for households as we head into the colder months,” he said. “The reality is, when we give more help to those who need it most, we all end up sharing the cost”
Network charges – the costs of operating, maintaining, and upgrading the electricity cables and gas pipes that deliver energy to your home – have also increased.
The data released by the regulator shows the biggest uptick will be in network costs, which will rise by £24 from 1 October, and will represent 22.56% of the final average bill.
In February 2025, Citizens Advice said energy network companies, which provide pipes and cables to people’s homes, pocketed nearly £4bn in excess profits over the last four years.
The charity has called on the network companies to give the money to struggling bill payers as five million people living in England and Wales currently live in households in debt to their supplier.
Although wholesale energy costs are showing signs of stabilising, the energy market is still vulnerable to global factors such as US tariffs and the war in Ukraine. (Getty Images)
Francis of the End Fuel Poverty Coalition told Yahoo News that ministers should think harder about the way “we pay for the gas and electricity network”.
He said: “there are other ways of funding investment in the grid rather than putting it all on people’s bills. Ultimately there will have to be something going on people’s bills, we accept that, but have they exhausted all the investment routes available.
“Is there a way of reforming the windfall tax and invest in infrastructure there maybe a system where we can control the vast profits these companies are making and hopefully get more investment into the grid that way,” he added.
Money Saving Expert’s Martin Lewis has called the standing charge a “moral hazard” as it disincentivises people from reducing their energy use.
The website has campaigned for standing charges to be lowered, arguing that they unfairly penalise households on lower incomes and those looking to cut their usage
Why is gas so much more expensive?
Gas prices are already high due to factors like the Russia-Ukraine war and reduced supply, even with wholesale prices falling by 2% over the past three months.
Francis also said the way that the standing charge has changed, due to an “ageing gas network” and a change in the way costs are charged.
He said: “The reason gas standing charge is going up so much is because they have actually changed slightly how the costs associated with running the gas network are charged.
“It used to be split between on unit rate, you paying a bit towards the network with every unit you use, and some through standing charge but what Ofgem have done is moved more onto standing charge and away from gas unit cost.
“The small reduction in gas unit cost has been wiped out by the standing charge increase.”
(PA)
The energy price cap peaked in early 2023 at £4,279 after surging in 2022 due to post-COVID energy demand and a reduced global gas supply
By mid-to-late 2023, the cap was back at £2,074 remaining between £1,568 and £1,928 across 2024 and 2025.
According to government figures households paid on average £655 for gas and £705 for electricity in 2019, a combined energy bill of £1,360, compared with £1,755 this year.
Should I switch to a heat pump?
With regular energy price increases many homeowners are looking at more cost-effective ways of supplying energy to their homes, and heat pumps could be one option.
Heat pumps are electrical appliances that replace gas boilers and work by transferring and intensifying heat from the outside air, ground or water into a building.
When compared to gas or oil, they are a greener and cleaner way and can produce around three units of heat for every unit of electricity they use.
Installing a heat pump could save you money on energy bills. (AFP via Getty Images)
Heat pumps have higher energy efficiency, which can mean lower utility bills, reduced carbon emissions, and potentially longer system lifespan compared to traditional boilers.
By moving to a heat pump from a traditional boiler you can avoid the volatile prices associated with gas and oil.
How expensive it, how much will it reduce gas bill?
Unfortunately, installing a heat pump can be expensive when compared with installing a gas boiler, the National Infrastructure Commission (NIC) estimates that air source heat pumps, the most common type, cost more than £10,000 more to install.
There are several types of heat pumps (air, ground or water) and the cost depends on factors such as the size of your home, the type of heat pump installed and the ease-of-installation.
The UK government offer grants up to £7,500 to install heat pumps with some companies offering installation as low as £500.
The Energy Saving Trust has stated customers can expect to save up to £50-£440 per year on heating bills by replacing an old gas boiler with a ground source heat pump.
The trust also estimated that a homeowner can save an average of £240 per year from switching a gas boiler to an air source heat pump.
What to do if I’m worried about my energy costs rising?
If you are concerned about your energy bills rising there are a number of measures you can take to ensure you are getting the best value for money and prevent you from missing payments.
Money Saving Expert has highlighted that the cap will likely remain at or slightly increase, until the end of 2025, so there may be fixed deals you can switch to that could save you nearly 15%, or around £250 a year.
Many of the deals have guaranteed rates, so you know they won’t rise for a year and at least until the 31 December, they have a ‘Cheap Energy Club’ to help you compare rates.
If you are finding it hard to keep up with energy price increases, you may be entitled to financial support from government schemes such as the warm home discount, the winter fuel payment or the household support fund.
Many energy suppliers have their own funding schemes or provide support through national schemes such as the energy company obligation.
These schemes provide a range of financial support, debt relief, energy advice, and the installation of energy efficiency improvements which can help lower your bills.
If you believe you may benefit from financial help contact your supplier to see what support you might be entitled to.