UK Energy Bills to Rise by 2% Despite Falling Wholesale Prices

London, UK - September 2025 - Millions of households across the UK will face higher energy bills this winter after Ofgem confirmed a 2% increase in its energy price cap from October. The regulator said the rise - slightly above analyst forecasts - will add around £35 a year to a typical dual fuel bill, taking average annual costs to £1,755.

While wholesale gas and electricity prices have remained stable in recent months, Ofgem explained that the increase reflects the cost of balancing the electricity grid and funding wider support schemes such as the Warm Home Discount.

Why bills are increasing

Ofgem said higher balancing costs are one driver. These are the expenses involved when the grid pays wind farms to switch off if there is too much power, while gas plants are paid to switch on closer to demand centres. This process added £815 million in costs during 2025 alone, according to industry trackers.

In addition, the Government has extended the Warm Home Discount scheme, making 2.7 million more households eligible for £150 off their bills this winter. While this is welcome support for low-income families, the cost is spread across all consumers through higher standing charges.

From October, electricity standing charges will rise by 4%, while gas standing charges will increase by 14% - from 29p a day to 34p.

New cap figures

For a household on a standard variable tariff paying by direct debit, Ofgem's cap sets the following maximum rates:

Electricity: 26.35p per kWh with a daily charge of 53.68p

Gas: 6.29p per kWh with a daily charge of 34.03p

Although the monthly increase is around £2.93 on average, consumer groups warn that the impact will be far greater in winter months, when usage for heating and lighting peaks.

Impact on UK households

Campaigners say many families are already struggling with energy debt, with Citizens Advice reporting that millions owe more than £1,000 to their suppliers. Simon Francis, coordinator of the End Fuel Poverty Coalition, said:

"Among the hardest hit by this rise will be the 12 million households already in fuel poverty. Bills remain painfully high compared to 2020, and higher standing charges only make the situation worse."

Energy UK, which represents suppliers, said while the Warm Home Discount extension will provide welcome relief, long-term reform is needed to target support more effectively.

What households can do

Ofgem emphasised that the cap is not a guarantee of the cheapest deal. It simply sets a ceiling on default tariffs. Customers who do nothing will pay the new capped rates, but better deals may be available by switching.

Experts recommend that households:

Consider moving to a fixed tariff that locks in prices for 12 months.

Review dual fuel deals combining gas and electricity, which can sometimes be cheaper.

Explore green energy tariffs that may offer competitive rates.

Ensure payment is by direct debit, the lowest-cost method according to Ofgem.

Comparison tools are widely seen as the best way to review options. Families can compare energy prices at https://freepricecompare.com/home-energy/
and see if a fixed plan could save them money this winter.

Customers who mainly use electricity can also compare electricity prices via https://freepricecompare.com/home-energy/compare-electricity-prices/
, while gas-heavy households should compare gas prices using https://freepricecompare.com/home-energy/compare-gas-prices/.

To work out personal costs, households can check energy costs with the calculator at https://freepricecompare.com/home-energy/energy-bill-calculator/

Looking ahead

Analysts at Cornwall Insight forecast that the cap may fall slightly in January, but warn that global markets, weather and government policy could still cause volatility.

For now, the message is clear: households cannot rely on the cap to deliver savings. Regularly reviewing tariffs and switching supplier remains the most effective way to reduce bills.

Free Price Compare (https://freepricecompare.com
) is an independent UK comparison service, authorised by the FCA, helping households find cheaper energy tariffs, broadband and insurance.

Free Price Compare
113 Romford Road, London, E15 4LY
Shay Ramani
Email - customerservices@freepricecompare.com

Free Price Compare is a trusted UK comparison service, founded in 2012 to help households and businesses save money on essential services. From energy and broadband to car insurance and personal finance, our platform provides clear, independent and impartial comparisons, making it easier for consumers to secure the best available deals.

With over 4,000 verified customer reviews and an average rating of 4.7/5, we are one of the UK's most highly-rated comparison providers. Our service is completely free to use, with revenue generated through agreements with suppliers when customers switch or sign up through our platform.

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For more information, visit: www.freepricecompare.com

This release was published on openPR.