Millions of households across Britain face higher costs from 1 October, when the Ofgem energy price cap will rise by 2%. The change means typical dual fuel bills will increase by around £100 per year, adding further strain during the cost of living crisis.
Standing charges under scrutiny
The price cap sets the maximum unit rates and standing charges suppliers can apply to standard variable tariffs. It does not cap total bills, which depend on consumption.
From October, the average fixed daily fee will reach around £196 for electricity and £124 for gas, regardless of how much energy a household uses.
Consumer groups argue this system penalises low-use and vulnerable households, as they pay the same standing charges as high-use homes. Critics say a fairer approach would tie charges more closely to usage.
Regional differences remain
Standing charges and unit rates vary significantly across Britain. Households in the North of Scotland, for example, face electricity standing charges of more than £200 a year, while those in London pay closer to £180.
Gas charges also fluctuate, with some regions set to pay over £130 annually. These differences reflect the cost of maintaining networks in different areas, but they make it harder for consumers to understand whether they are on a competitive tariff.
Forecasts point to more volatility
Industry projections suggest the cap will fall slightly in January, before rising by around 5% in April and again in July 2026. By next summer, annual bills could once again sit well above current levels.
Wholesale prices remain volatile, with gas still around 75% higher than before the energy crisis began in 2021. Global supply risks, including geopolitical tensions and rising demand from Asia, could trigger further price spikes during the winter.
Analysts warn that households should not expect stability for several years, as the UK transitions away from fossil fuels and towards more renewable generation.
Cheaper fixed tariffs return
Despite the October increase, some suppliers are offering fixed deals below the new cap. These tariffs are typically 10–13% cheaper, giving households the chance to reduce costs if they act quickly.
“Doing nothing often means paying the most,” said Shay Ramani, CEO of Free Price Compare. “If you take time to compare energy prices, you can often secure a deal that avoids the worst of future increases.”
Suppliers argue that standing charges help to cover network costs and protect vulnerable customers. However, consumer advocates say households need clearer information about alternative tariff structures so they can make informed choices.
Role of dual fuel tariffs
For many families, dual fuel tariffs — combining gas and electricity with one supplier — remain among the most competitive options. These tariffs also simplify billing and customer service.
But not all households benefit. For low-use customers, or those with prepayment meters, splitting suppliers may be cheaper. Experts advise carrying out a full comparison before making changes.
Government schemes provide some relief
Support measures remain available, though limited. The Warm Home Discount gives eligible households a one-off £150 rebate, while Winter Fuel Payments of up to £300 continue for older people.
Campaigners say these schemes, while welcome, are not enough to offset high bills. They have called for more targeted reforms to standing charges, which disproportionately affect those who use the least energy.
Ofgem has signalled that suppliers may be required to offer low or no standing charge tariffs from 2026, but significant reform is unlikely before then. The Treasury has also faced pressure to consider cutting VAT on domestic energy bills, though no decision has been made.
Key advice for households
Experts recommend that households:
- Check whether a fixed tariff could provide savings compared with the new cap.
- Compare both single-fuel and dual fuel tariffs to identify the best option.
- Consider standing charges alongside unit rates before deciding.
- Use online tools to review deals regularly, as prices can change quickly.
Outlook
The October price cap rise highlights the ongoing pressure on UK households, despite some stabilisation in wholesale markets. With further fluctuations expected next year, experts say regular comparisons and timely switching remain the most effective ways for families to control costs.
For practical guidance, independent advice, and impartial tariff checks, households can turn to Free Price Compare to avoid overpaying this winter.
