The price cap will rise by 13.5% on 1 October, the largest single increase since the energy crisis peaked in 2022. Ofgem confirmed the figure last week, blaming higher wholesale gas prices and increased network costs. For a typical dual-fuel household paying by direct debit, that means an extra £180 a year, taking the average bill to £1,928.
As reported by labourhub.org.uk, the warning comes alongside government forecasts that household disposable income will shrink further this winter. The question every homeowner should be asking is not whether to absorb the hit, but how to cut consumption permanently.
Who pays the most, and who can fight back
The rise hits prepayment meter customers hardest: their cap is set 9% higher than direct debit, at roughly £2,100 annually. Pensioners on fixed incomes and renters in draughty flats have least room to absorb the spike. But for homeowners with some capital, the arithmetic now favours action.
Improving a home from EPC band D to C typically saves £300–£500 a year on bills, according to Energy Saving Trust data. That saving effectively grows by £40–£70 under the new cap, because every kilowatt-hour you don’t use is one you don’t pay the higher rate for. The payback period for loft insulation (costing £300–£500) shrinks from three years to two and a half. Cavity wall insulation (£1,000–£2,000) pays back in four years instead of five.
Solar and heat pumps, still worth it?
Higher bills improve the return on generation and heat-pump investments. A typical 4 kW solar array costs £6,000–£8,000 and saves around £500 a year under the current cap. At the new cap, that saving rises to roughly £570. The payback period drops from 14 years to 12, even before the Smart Export Guarantee payments of 5–15p per kWh exported.
The catch is borrowing costs. Mortgage rates remain above 5% and unsecured loans for solar are running at 8–12% APR. Yet the internal rate of return on solar, if bought with cash, now exceeds 8% over 25 years, which beats most savings accounts. Heat pumps, at £7,000–£13,000 after the Boiler Upgrade Scheme grant of £7,500, still break even on running costs within 5–8 years when replacing an old gas boiler.
What the 13.5% rise means for EPC targets
The government’s plan to mandate EPC C for new tenancies by 2028, and for owner-occupied homes by 2030, looks more urgent with every cap rise. A home rated EPC E or F faces bills £800–£1,200 higher than an equivalent C-rated property. At the new cap, that gap widens to £900–£1,350.
Yet the policy is stalled. The Department for Energy Security and Net Zero has not set a date for the owner-occupied mandate, and the cost-of-living crisis makes it politically toxic to force upgrades on cash-strapped households. The result: a two-tier market where those who can invest now lock in lower running costs, while those who delay pay a growing premium each winter.
Homeowners on standard variable tariffs should act before 1 October. Compare fixed-rate energy deals now, some are still 5% below the cap, and book an insulation survey through the Energy Company Obligation scheme if your household income is below £31,000. For everyone else, the maths on solar and heat pumps has just got 13.5% better.
Frequently Asked Questions
Yes. A typical 4 kW array saves roughly £500 a year under the current cap. At the new cap, that saving rises to about £570, shortening the payback period from 14 to 12 years. If you use more than 50% of the solar power directly, the savings are even higher.
Yes. The Energy Company Obligation (ECO4) scheme provides free or heavily subsidised insulation for low-income households. Eligibility depends on benefits or a low income. Contact your energy supplier or visit gov.uk for details. Applications are open now.
