Households to pay £300 more per year under Labour if energy price cap rises again

Millions of households will be "ripped off" this autumn as energy bills are expected to creep up again despite Labour's pledge to bring them down, campaigners have warned.

Fresh forecasts from Cornwall Insight show the Ofgem price cap may rise by 1% in October, pushing the average annual bill from £1,720 to £1,737. It means families will be paying nearly £300 more a year than when Labour took power last summer. Since then, the cap has jumped four times, even though Sir Keir Starmer pledged during the election campaign to cut bills by £300 by 2030. Instead, critics say Labour's policies are pushing them up.

Part of the latest rise comes from Labour's expansion of the Warm Home Discount scheme this year, which will add around £15 to annual bills - a total of £420 million across the country.

Simon Francis, campaign coordinator at the charity End Fuel Poverty Coalition, said: "We had called for ministers to fund the expansion by looking at the billions of pounds energy networks have generated in excess profits, but they obviously chose not to."

Earlier this year, Citizens Advice found that energy network companies, which provide pipes and cables to people's homes, have pocketed nearly £4billion in excess profits since the energy crisis started in 2021. Wider energy providers have reportedly amassed excess profits of nearly £500billion.

Jonathan Bean, policy and parliament lead at campaign group Fuel Poverty Action, said: "We're being ripped off. High energy prices result from the complete failure of Ofgem and the Government to clamp down on huge profits and money wasted on marketing, bonuses and CEO salaries.

"Labour promised a £300 bill saving in their manifesto. Instead, they've allowed energy bills to increase since the election. It's not good enough."

Cornwall Insight attributed another portion of the forecasted rise to continued volatility in wholesale markets.

Other analysts have criticised the current pricing structure that underpins the price cap. Gas remains the key factor in electricity pricing, meaning UK households remain heavily exposed to global gas trends, even as a growing share of electricity is generated from cheaper renewables.

Some consumer groups say this link between gas and bills is no longer justified.

Mr Francis said: "The cost of a gas-fired power station is around £114 per megawatt hour compared to around £44 for offshore wind and £41 for solar."

Yet households are still paying prices set by gas.

Mr Francis continued: "We've been trying to get the Government to end this 'marginal pricing' issue - we're unsure if they're considering this."

Other analysts point out that while wholesale gas prices have fallen substantially in 2025, down 44% since February, this has not been reflected in household bills.

Vix Leyton, consumer expert at financial services provider thinkmoney, said: "Wholesale prices are now back at roughly the same levels we saw in 2018, which makes it hard to justify why households are still being told big price hikes are unavoidable."

Ofgem's methodology requires suppliers to buy energy in advance to ensure security of supply and protect against volatility. This practice, known as hedging, delays the impact of falling prices on bills.

Matt Oberle, energy expert at Utility Rates, said: "Many suppliers locked in higher wholesale rates during periods of extreme volatility in 2022 and 2023. These hedged positions ensure financial stability for suppliers but delay the pass-through of lower prices to consumers."

He added: "Network charges, policy levies, and supplier operating costs have also risen over the past five years. For example, renewable energy subsidies and the cost of decarbonisation programmes are now embedded in domestic tariffs."

Britain's green energy subsidies have added an estimated £280 to households' energy bills per year, according to a study from the Renewable Energy Foundation (REF).

Energy suppliers themselves have warned that volatility is likely to remain a permanent feature of global gas markets.

Nigel Pocklington, chief executive of Good Energy, said: "Gas prices spiked in 2018, they spiked again in 2021 and 2022. The common theme is volatility. The only way to deliver sustainable reductions in bills is to generate more British home-grown clean power so households are not exposed to global gas prices."

The financial impact is particularly acute for pensioners and those on low incomes. Dennis Reed, director of pensioner charity Silver Voices, said: "Last year, hundreds of thousands of pensioners could only afford to heat one or two rooms. Our high energy prices compared to other countries indicate a dysfunctional market, which Labour needs to sort out."

Citizens Advice estimates around 10 million households remain in fuel poverty, defined as spending a disproportionate share of income on energy.

Ofgem will confirm the latest price cap adjustment is on August 27 and will apply it from October 1.

Analysts say consumers can still take action by reviewing their tariffs and considering fixed deals if available.

A spokesperson for Ofgem said: "We know the cost of energy remains a challenge for many households. That's why we've set out plans to address the growing levels of consumer debt and reform the system so customers receive a higher standard of support from their supplier when they're struggling.

"We've taken action already by toughening up requirements on suppliers to take care of their customers, and to actively identify anyone who may be struggling to pay their bills and offer support. But we know a more enduring solution to addressing energy affordability is needed, and we will continue to work with the Government and consumer groups to support those who need it most."

A Department for Energy Security and Net Zero spokesperson said: "The only way to bring down energy bills for good is with the Government's clean energy superpower mission.

"Wholesale gas makes up the majority of households' energy bills, so we must get off the rollercoaster of fossil fuel prices and shift to cleaner, homegrown power we can control.

"We are helping over six million households this winter by expanding the £150 Warm Home Discount and working with Ofgem on a debt relief scheme to bring down bills for every home."