Overview
- Ofgem’s quarterly energy price cap increases by 4% from October 1, raising the typical annual direct-debit bill to £1,723 for an average household.
- The regulator said higher wholesale gas prices driven by the Middle East conflict and volatile global markets were the main reason for the cap rise.
- The government will remove the 5% VAT on domestic electricity from October 1, a measure the Treasury estimates will save the average household about £45 a year.
- Consumer advisers are urging more than four million homes without smart meters to submit meter readings before October 1 or consider fixed deals to avoid suppliers estimating usage at the new, higher rates.
- Forecasters warn of much larger cap increases in early 2027, gas will still attract 5% VAT, and ministers are reported to be weighing whether to extend VAT relief to gas ahead of the autumn Budget.