Energy bills will go up by an average of around £35 a year in October, the industry regulator said today.
Ofgem set a new cap on gas and electricity prices for the last quarter of the year that will allow suppliers to increase the bills of the majority customers on standard tariffs by around 2%.
For an average household paying by Direct Debit for gas and electricity, the overall bill will be £1,755 per year.
This will cover the three months to December, the period when central heating is switched on again after the summer. Ofgem will set a new cap for the December to March period.
The new price cap will add around £2.93 a month to a typical household dual fuel bill for a family on a variable tariff. The 37% of customers on a fixed deal will not be affected.
The increase in the cap is caused by the extension of the Government's Warm Home Discount, which knocks £150 off the bills of vulnerable customers struggling to pay. This is funded by other customers and will add around £1.42 a month to the average household bill.
Another factor is an increase in electricity balancing costs - the system used by operators to ensure a stable electricity supply at all times - which adds around £1.23 to the average household bill.
Tim Jarvis, Director General, Markets at Ofgem, said: "While there is still more to do, we are seeing signs of a healthier market. There are more people on fixed tariffs saving themselves money, switching is rising as options for consumers increase, and we've seen increases in customer satisfaction, alongside a reduction in complaints.
"While today's change is below inflation, we know customers might not be feeling it in their pockets. There are things you can do though - consider a fixed tariff as this could save more than £200 against the new cap. Paying by direct debit or smart pay as you go could also save you money."
Ofgem said when adjusted for inflation the cap is 0.9% lower than the same period in 2024.