Struggling households are encouraged to check with suppliers and the Government to ensure they are getting all the support they are eligible for as Ofgem announces the increase of the energy price cap for the last quarter of 2024.

The price cap that sets a maximum rate per unit and standing charge that can be billed to customers for their energy use will rise by 10% on the previous quarter from 1 October to 31 December 2024. It is estimated that for an average household paying by direct debit for dual fuel, this will equate to £1,717 per year, adding around £12 a month to an average bill. 

The regulator recognises that any increase will put additional pressure on households and is working with the Government to explore options to support customers that need the most help, as part of an ongoing review of energy affordability.

Consumers concerned about their bills are advised to contact their supplier and check they are accessing all the support they are eligible for. This follows a campaign launched by the Department for Work and Pensions, encouraging the 880,000 households eligible for pension credit to claim it, and other support such as Winter Fuel Payment.

Jonathan Brearley, CEO of Ofgem, said: “We know that this rise in the price cap is going to be extremely difficult for many households. Anyone who is struggling to pay their bill should make sure they have access to all the benefits they are entitled to, particularly pension credit, and contact their energy company for further help and support. 

“I’d also encourage people to shop around and consider fixing if there is a tariff that’s right for you – there are options available that could save you money, while also offering the security of a rate that won’t change for a fixed period. 

“We are working with Government, suppliers, charities and consumer groups to do everything we can to support customers, including longer term standing charge reform, and steps to tackle debt and affordability.”

StepChange Debt Charity following Ofgem’s announcement urges the new Government to introduce urgent targeted support for struggling households.

The charity says energy costs remain a significant challenge for its clients, as the average amount of energy debt per StepChange client has risen by 29% year on year – from £1,679 in the first half of 2023 to £2,260 in the first half of 2024.

After more than two years of inflated energy costs, StepChange is concerned that many households are still struggling to afford their bills and repay energy debt, despite prices falling in recent months. The charity says this situation may only worsen as the price cap rises and the colder weather sets in.

Richard Lane, Chief Client Officer at StepChange Debt Charity, said: “While some households may not have felt the squeeze quite as much in recent months due to the warmer summer weather and a slight fall in the cost of energy, for many – particularly those on the lowest incomes – affording energy bills each month remains uncertain.

“For our clients struggling with energy arrears, levels of debt have risen over the past year regardless of the price cap being lower than it was in 2022/2023. With other essential costs such as housing putting long-standing pressure on people’s budgets, it’s a worry that a rise in the price cap may tip struggling households into deeper debt.

“To overcome this cycle of financial hardship and allow households some protection from the fluctuation in the cost of energy, the new Government must urgently introduce targeted support for those struggling, while addressing the £3bn worth of energy debt that has built up. Too many households are facing fragile budgets, in which even slight rises in the cost of utilities will push them into the red.”

Energy UK’s chief executive Emma Pinchbeck said: “An increase ahead of winter will be worrying news for many customers and an unwelcome reminder of how global factors can push up the price of fossil fuels, increase the cost of energy and ultimately hit customer bills.

“With energy debt at record levels, it is not clear how many customers are struggling even before this increase. Suppliers will continue to do all they can by offering a range of financial and other support and we would always encourage customers in difficulty to get in touch and see what help is available.

“However there is only so much they can do when millions of customers struggle to afford energy at the cost it takes to supply it. It increases the urgency of looking at how we can increase and better target financial support so it reaches those in most need this winter – as well as long term change to reduce our dependence on volatile international markets.

“We’ve put forward proposals which could – by reallocating policy costs – enable the existing Warm Home Discount to be doubled without increasing bills, as well as helping make new heating technologies more affordable for households looking to reduce their reliance on gas. So we are urging the Government to work with suppliers and consumer groups on ideas like this which could immediately help millions of households. 

“Keeping bills down for everyone over the coming years and decades means reducing our dependency on gas and its volatile pricing, increasing the production and distribution of clean homegrown power and making more of our homes and businesses energy efficient. 

“Standing charges have increased significantly over the last couple of years and so it’s right that Ofgem is looking at how to address these growing concerns. Suppliers are keen to work with Ofgem to ensure that the costs they incur are spread fairly across customer bills but any change needs to be introduced carefully – so that cutting costs for some doesn’t then lead to big bill increases for other vulnerable customers. It’s also true that the price cap gives suppliers limited scope to reduce standing charges.”    

Ember analyst Frankie Mayo says: “Energy costs are rising because gas prices are now highly unreliable. This is an issue of international markets but impacts households across the country. Gas prices have been rising across the summer and remain higher than pre-crisis levels – building more wind and solar and supporting home insulation will reduce the need to import expensive gas. The UK will continue to lack security against price spikes until the country permanently cuts its fossil fuel dependency.”

Short term solutions suggested by energy experts include home insulation improvements, revising social tariffs and the price cap mechanism. However, in the medium term, the government has ambitious targets for clean power which aims to reduce UK exposure to international fossil fuel markets.