Millions will see energy bills rise by at least £139 - how you can save money

Energy prices will rise for 15 million households by at least £139 to a record high from October, the UK’s energy regulator has announced.

Customers on default tariffs paying by direct debit will see the sharpest jump in prices since the cap was introduced, taking average bills to £1,277, Watchdog Ofgem said.

Why are energy bills increasing?

The increase has been driven by a rise of more than 50% in energy costs over the last six months, with gas prices hitting a record high as inflation jumped amid the easing of pandemic restrictions, Ofgem said.

Pre-payment customers will see costs rise by £153, from £1,156 to £,1309.

Households that shop around and sign up to fixed plans with suppliers are not subject to the price cap. Customers are often able to save hundreds of pounds by choosing a fixed tariff over the default.

The regulator reviews the price cap once every six months, and changes it based on the cost that suppliers have to pay for their energy, cost of policies and operating costs, among other things.

The new rate will come into force from October 1 for customers on their supplier’s default tariffs.

‘Higher energy bills are never welcome’

Ofgem chief executive Jonathan Brearley said: “Higher energy bills are never welcome and the timing and size of this increase will be particularly difficult for many families still struggling with the impact of the pandemic.

“The price cap means suppliers only pass on legitimate costs of supplying energy and cannot charge more than the level of the price cap, although they can charge less.