Energy bills for millions to rise more than expected in October

Energy bills will rise more than expected for millions of British households this autumn as a result of the mounting cost of government subsidies.

- Jillian Ambrose

The energy regulator for Great Britain, Ofgem, will raise the government's cap on bills by 2% from October, or the equivalent of just over £35 a year, to £1,755 for a typical annual dual-fuel bill.

The higher-than-expected increase comes despite a 2% fall in the wholesale price in the energy markets over the last three months.

Prices for households will go up just as the colder weather sets in because money is needed to cover the rising cost of the government's energy policies.

About £15 of the £35 increase will fund an expansion of the warm home discount scheme to provide an extra 2.7m households with a £150 reduction in their bills.

Another £17 will go to balancing the energy system as Britain relies more heavily on renewable energy sources. The money will fund payments made to shut windfarms when there is more renewable energy generation than can be used, or to fire up gas power stations when renewables are in short supply.