Energy prices for millions of households will rise to the highest level for three years, under regulator Ofgem’s price cap.

Ofgem said the price cap will increase by 4% on 1 October, driven by higher wholesale gas prices due to the Iran war.

A household using a typical amount of gas and electricity will pay £60 a year more, but more than a third of households are on fixed tariffs so their prices will not change.

The government said its cut to VAT on electricity bills will save households £45 and it was doing more to address cost of living pressures, but opposition parties said Labour was not doing enough.

The new cap will hit household bills as the colder weather arrives in October.

Suppliers say energy debt has rocketed and, with high bills likely to persist, have called for more support for those struggling to pay.

Prime Minister Andy Burnham acknowledged people would find the increase “difficult” but highlighted his move to cut VAT from electricity bills, which he said would help from October.

He said the government would “continue to look… at how we get energy prices down in the long term”.

As well as the VAT cut, the government said the warm homes discount would take £150 off bills for six million households this winter.

But analysts at the energy consultancy Cornwall Insight have forecast domestic energy prices may rise a further 9% in the new year, bringing renewed concern to households during the coldest months.

Shadow energy secretary Claire Coutinho said the government must “put cheap energy first”, saying while it had promised to cut bills by £300 they had “gone up by nearly £400 instead”.

Liberal Democrat spokesperson for energy and net zero Pippa Heylings said Burnham needed to “wake up to the scale of the challenge” and make bold changes to lower bills.

Reform UK treasury spokesperson Robert Jenrick said households faced a “difficult period ahead” and said Labour’s “net zero ideology” is driving up bills.

Former Prime Minister Gordon Brown also weighed in, saying the government should introduce a “machine gaming tax” and use proceeds to help those struggling with bills.

Longer term, he said Burnham should look at a social tariff for energy.

“I think Andy Burnham, I know him well, will want to do something along the lines I’m suggesting,” he said.

Neil Kenward, Ofgem’s director general for markets, said while gas bills were rising by 8%, electricity bills were actually falling slightly due to the government’s VAT cut.

He said the gap between gas and electricity bills meant it would be cheaper for households to transition to heat pumps.

Around 35% of households – or 11 million households – are on fixed tariffs, but 22 million in England, Wales and Scotland are on tariffs affected by the price cap.

Ofgem said the price cap will rise by £60 per year – or £5 per month – to £1,723 for the typical household using both electricity and gas and paying by direct debit if this level was sustained for a year.

Kenward told the Today programme the rise was technically 3.6%, but Ofgem always rounds the number which is why it publicised the 4% figure.

Kenward added: “Savings are available by choosing a fixed tariff, which are available at £100 or more below the October price cap.”

The energy cap sets a maximum price for each unit of gas and electricity, not the total bill, so a household’s final bill depends on their usage.

In July, Ofgem reduced what it believes to be a “typical” level of energy use, because many homes have cut back owing to high prices of recent years while energy efficiency has improved.

Its new estimate is 9,500 kWh of gas and 2,500 kWh of electricity a year.

Single mum Dana Lazarevic told BBC News Your Voice that she carefully coordinates washing times to make use of cheaper periods of energy at the weekend.

Although the lecturer from Leeds said she was not on the breadline, the cost of essentials meant restricting some activities for her children.

“When winter comes and the cold bites, you need to put on the heating and need to have the money to pay for it,” she said.

The price rise has been driven by wholesale costs, which make up just over a third of a domestic dual-fuel energy bill.

The average price of gas has been 61% higher over the past three months compared to late 2025, according to suppliers’ trade body Energy UK.

And households are still paying hundreds of pounds a year more on average than before Russia’s full-scale invasion of Ukraine in 2022 started the energy crisis. Bills have gone up by about 70% compared with the pre-crisis norm, according to industry data.

That means unpaid bills and charges have shot up. Energy UK estimates total debt to have collectively risen to £6bn, with an expectation it will increase to about £7bn by the end of the year.

The trade body has called for a flexible discounted tariff for those most in need, funded by taxation. That is supported by many debt charities.

Vanessa Northam, director at debt charity StepChange, said the increasing number of people seeking help often had high energy debt, averaging at £2,600 on top of other financial commitments.

The charity has joined calls for the government to introduce a social tariff.

Her advice for those who might only just be managing as winter approaches includes:

Suppliers offer various support schemes to anyone struggling to pay, or who is likely to find it difficult.

Energy UK has a list of these schemes, external. But it stresses companies can often only help if you tell your supplier you are unable to pay.