Southampton families are bracing for another hit to their wallets this autumn and winter, as Ofgem has confirmed that the energy price cap will rise by 2 per cent from October. The move means a typical household in England, Scotland and Wales will see their annual bills climb to £1,755—a jump of £35 on the current rate.
For the average home, that’s an extra £2.93 a month, nudging the cost of a default tariff from £100 to £102 a month. The price cap, introduced in 2019, sets the maximum rate suppliers can charge per unit of gas and electricity for those not on a fixed-rate deal. It’s a safety net for millions who haven’t locked in a specific tariff, but it’s no guarantee of bills staying still as wholesale prices shift.
There is some good news: about 37 per cent of households are now on fixed-rate tariffs, shielding them from this latest bump. But for everyone else, the rise will be immediate and hard to avoid. The increase is a shade steeper than many experts forecast. Cornwall Insight, a respected energy consultancy, had predicted an average rise to £1,737 per year—less than half the actual jump.
Back in July, falling Middle East tensions led some to expect a small drop in bills, but wholesale markets have since turned volatile. Energy prices have been buffeted by global politics, including uncertainty over US trade policy and ongoing questions about Europe’s energy security.
Cornwall Insight now says a small dip in January is possible, but only if the geopolitical winds shift and Britain enjoys a mild winter. Any change in policy costs or new government initiatives—especially support for new nuclear power—could also feed into future bills.
The new cap means electricity will be charged at 26.35p per kWh (up from 25.73p), with a daily standing charge rising to 53.68p (from 51.37p). Gas rates are ticking down slightly per unit to 6.29p per kWh (from 6.33p), but the daily standing charge leaps from 29.82p to 34.03p.
Labour wasted no time laying the blame at the Conservatives’ feet. A party spokesperson said: “Energy bills soared under the Conservatives because they tied our country to the fossil fuel rollercoaster and working people are still paying the price… That’s why Nigel Farage’s unpatriotic war on clean energy would be a total disaster for families, businesses and our economy.”
Labour pointed to its plan to expand the warm home discount, pledging that three million more families will get £150 off their bills this winter—a total of six million households. The party says its push for clean, homegrown energy will offer permanent relief.
Ofgem’s director general of markets, Tim Jarvis, acknowledged the pain for households. “That’s slightly lower than the rate of inflation, but is nevertheless a rise, and I recognise that’s going to be unwelcome for many,” he told the BBC.
He urged customers to shop around: “People can get cheaper deals in the fixed-rate market, and we’ve already got about a third of households that are on fixed rate deals.”
Mr Jarvis explained the two biggest drivers behind the hike: the government’s expansion of the warm home discount for low-income families—helpful for many, but ultimately baked into the price cap—and higher network costs, the price for keeping the lights on nationwide.
Energy minister Michael Shanks stressed the stubbornly high price of wholesale gas—still 75 per cent above pre-Ukraine war levels. “That is the fossil fuel penalty being paid by families, businesses and our economy,” he said, repeating the government’s call for a shift to “clean, homegrown power we control, to bring down bills for good.”
Ofgem says the latest increase is mainly down to higher “balancing costs”—an extra £1.23 a month, on average. These are the expenses network operators face keeping supply and demand in sync, especially as more renewables come online. The National Electricity System Operator sets these levels, and they’re likely to keep fluctuating as Britain’s energy mix evolves.
Not everyone is convinced by the green transition. Climate sceptic Andrew Montford argued that rising costs are the result of “increased renewables generation,” claiming: “We are paying windfarms to switch off, not only when grid capacity is inadequate, but increasingly when overall demand is less than renewables supply.”
Greg Marsh, chief executive of AI money-saving tool Nous.co, offers these tips for Southampton residents:
- Take a meter reading on September 30: If you don’t have a smart meter, submit a manual reading before the new cap kicks in, to avoid being charged extra.
- Check your smart meter: If it’s not working, you could be paying estimated bills. Submit manual readings if necessary.
- Stick with direct debit: It’s the cheapest way to pay. Ditching it could cost an extra £100 a year.
- Consider a fixed tariff: Many households on variable rates could save by switching.
Ofgem will review the price cap again in January, but with the energy markets suffering with the Ukraine War and Green policies of the Labour government, theres no guarantees. For now, Southampton households are being told to brace for yet another hit to their disposable income.
