Energy price cap Scotland: How much bills are rising, as Ovo, Octopus Energy offer free electric blankets

The regulator announced it is hiking its price cap from the existing £1,568 for a typical household in Scotland, England and Wales to £1,717, adding around £12 a month to an average bill. However, it is around £117 cheaper than the cap in October last year, which was set at £1,834.

A typical household's annual energy bill is expected to rise by £149 in October under the new price cap.

When does the price cap rise?

The price cap is rising from today, October 1. Experts have suggested people submit a meter reading as the change comes in, to guarantee consumers avoided being charged on estimate rates.

Why is the energy price cap rising?

Ofgem said rising prices in the international energy market, due to heightened political tensions and extreme weather events, was the main driver behind the decision.

While prices are much lower than their peak, they remain well above pre-Covid pandemic levels. The winding up of financial support from the UK and Scottish governments has added to the impact.

Jess Ralston, head of the Energy and Climate Intelligence Unit, said bills in winter would be about 50 per cent higher than they were pre-crisis on average.

“A lack of progress on energy efficiency and heat pumps means that our reliance on gas hasn’t fallen much in recent years, despite the volatility in the international markets forcing bills to skyrocket,” she said.

What should householders do about the price cap rise?

Jonathan Brearley, the chief executive of Ofgem, said: “We know that this rise in the price cap is going to be extremely difficult for many households.

“Anyone who is struggling to pay their bill should make sure they have access to all the benefits they are entitled to, particularly pension credit, and contact their energy company for further help and support.”

He also urged consumers to “shop around” and consider opting for a fixed-rate tariff that could save people money.

Websites such as Martin Lewis’s MoneySaving Expert portal are among advice sites that can assist with tariff comparisons.

Citizens Advice Scotland is also a body with advice to assist home owners who are under pressure. The body’s energy spokesperson Matthew Lee said: “Energy companies too should play their part by offering a social tariff for those on low incomes. Some have already done this but we need it to become the norm across the industry. And we also need more write-off schemes for people who are deep in energy debt with no way of repaying it.

“Meanwhile the Citizens Advice network is ready to help anyone who is worried about how to keep their home warm this winter. Our advice is free, confidential and impartial.”

How does the price gap work?

The price cap sets a maximum price that energy suppliers can charge consumers in Scotland, England and Wales for each kilowatt hour (kWh) of energy they use. It means it does not limit a household’s total bills, because people still pay for the total amount of energy that they use.

The figures provided by Ofgem indicate what a household using gas and electricity, and paying by direct debit, can expect to pay if their energy use is typical.

Earlier this week, Craig Lowrey, principal consultant at Cornwall Insight, said the announcement would not be the “news households want to hear when moving into the colder months”.

“Following two consecutive falls in the cap, I’m sure many hoped we were on a steady path back to pre-crisis prices,” he said. “However, the lingering impact of the energy crisis has left us with a market that’s still highly volatile and quick to react to any bad news on the supply front.”

What impact has axing the winter fuel payment had?

The increase in the energy price cap comes as both the Scottish and UK governments remove winter fuel payments for about 10 million pensioners.

The UK government announced in July it would issue payments only to pension credit recipients or claimants of some other means-tested benefits, including universal credit. The Scottish Government subsequently announced it would also drop universal winter fuel payments, with the benefit becoming devolved later this year.

About 10 million people will lose the allowance this year. The annual tax-free payment of between £100 and £300 was introduced in 1997 to help eligible pensioners meet the costs of heating their homes in winter.

Mr Lowrey said: “With the removal of the winter fuel payment for some pensioners at the same time as bills going up, it’s likely that some will struggle and it remains to be seen if the Government will bring in measures to support those worst hit by the removal of winter fuel payment.”

The new UK government decided to stop winter fuel payments for those who are not in receipt of pension credits or other means tested benefits.

Previously, the payments of up to £300 had been available to everyone above state pension age.

The Treasury said the changes would see the number of pensioners receiving the payments fall from 11.4 million to 1.5 million – so just under ten million would miss out.

Joanna Elson, chief executive at Independent Age, said: “Today’s price cap announcement shows that the drop in prices earlier in the year was only a brief moment of respite, and energy prices will rise yet again by 10 per cent, from an average of £1,568 per year to £1,717. As the weather starts to turn colder, older people in financial hardship up and down the country are worried about their budgets. Many are on a low fixed income, and they will now need to find more money to cover their rising energy bills.  

“To make matters worse for older people in poverty, this bill increase coincides with the ending of the winter fuel payment for people not receiving Pension Credit. There could be up to 1.2 million older people eligible for Pension Credit who don’t receive it.

“On top of that, many are just above the eligibility threshold but still live on a low income and struggle to make ends meet. We are incredibly concerned about the people in later life who will be cut off from a vital source of income worth up to £300 at a time when their bills are rising.”

What help are energy company’s offering? What is being done by Octopus Energy and OVO Energy?

Two providers - Octopus Energy and OVO Energy - are offering free electric blankets to some of their most vulnerable customers to help keep warm this winter.

The scheme has been relaunched by Octopus Energy, with 20,000 free blankets to be provided to vulnerable customers across the UK. The scheme is open to all Octopus customers through its Octo Assist Fund. A priority is given to those classed as "medically vulnerable, elderly, or living alone".

The company has encouraged customers wanting to take up the offer who are concerned about paying their bills to contact Octopus directly.

Mario Lupori, director at Octopus Energy Group, said: "We know many people are worried about the costs of heating their homes over winter. An electric blanket means you heat the human, not the home - staying warm for as little as 3p an hour."

OVO Energy has separately launched a £50 million Extra Support Package. This will provide free energy-saving products, including electric throws and mattress toppers.