HOUSEHOLD energy bills will hit a three-year high in yet “another nail in the coffin” for budgets after Ofgem announced a 4 per cent rise from October.

The regulator confirmed today that gas unit rates are set to rise from 6.29p per kWh last winter to 8p, up around 27 per cent year on year.

It means the new cap is £1,723, which is £147 more than the same period last winter, when the October cap stood at £1,576, and 150 per cent higher than at the end of 2020.

From October, the government’s cut to VAT on electricity bills from 5 to 0 per cent will shave around £45 a year off the average bill.

But with experts predicting a further 9 per cent rise in January, unions and campaigners have urged the government to act again.

Cornwall Insight predicts the January 2027 price cap will rise to £1,872, 18 per cent higher than January 2026.

End Fuel Poverty Coalition co-ordinator Simon Francis said that while the price cap may limit the unit rates, “sadly it doesn’t cap the number of people suffering due to rising energy costs.”

He said: “Price rises fall hardest on the households who can least afford them, with millions forced to pay more for the same energy or ration the energy they use even further.

“Cutting VAT on electricity and last year’s extension of the Warm Home Discount was a start, but ministers need to go further and faster in helping people.

“That means further expansion of support programmes, funding a proper energy debt relief scheme and a serious push to improve energy efficiency of the homes that need it the most.

“Yet as around five million households in the UK spend more than 20 per cent of their income on energy, just a handful of energy firms have made more than £6 billion in UK-generated profits this year alone.”

Recent TUC analysis shows that average annual payments for energy bills have gone up by £437 compared to May 2021 — costing households a total of £2,500 since.

Meanwhile, bank profits are booming, with the big four banks making more than £1 billion a week.

TUC general secretary Paul Nowak said the rise will be “another hammer blow for those struggling to get by,” adding: “Households up and down the country are already up against it.

“Too many are skipping meals, dipping into savings and having to cut back on life’s essentials.”

The union body is calling for an increase in the tax on bank profits to pay for a social tariff and cut bills for most households by up to £559 a year.

“It’s the right thing to do,” Mr Nowak said. “Banks are raking it in while many up and down the country are struggling to get by — they can well afford to pay more tax.”

Unite general secretary Sharon Graham said: “[The] price cap increase is another nail in the coffin of household budgets this winter.

“The time for stopgap and ad hoc measures is long gone. We need a complete overhaul of the energy market based on public ownership to drive down bills and end profiteering.”

Global Witness senior campaigner Flossie Boyd called it “galling” that millions of households are being asked to shoulder the burden of higher energy bills “while a handful of fossil fuel firms line their pockets.”

“Buoyed by fallout from war, oil giants have been rubbing their hands with glee this year — raking in half a billion dollars every single day last quarter,” she said.

“Imagine how many solar panels, flood defences and heat pumps we could install with all the cash that’s been flowing into wealthy oil executives’ pockets.”

Independent Age chief executive Joanna Elson warned the announcement will “heap more pressure on the already stretched budgets of the 1.7 million older people in the UK living in poverty.”

“Each winter we hear heartbreaking testimony from older people wearing winter clothing to bed to fend off the cold, being forced to choose between putting food on the table or using their heating, and some are abandoning their cold homes altogether to find warmth in public buildings,” she said.

The group called on the government to boost the Warm Home Discount from £150 to £400, to “make an immediate difference to those who cannot make ends meet.”

“In the long-term, the development of a more comprehensive targeted energy social tariff is essential to protect low-income households,” Ms Elson said.

Research by Uswitch.com shows that 53 per cent of households are worried about affording their heating this winter, while a quarter feel powerless.

Green MP Hannah Spencer said: “It’s a repeat story for millions of households — energy bills up just in time for winter, and now to their highest level in three years.

“Meanwhile, oil and gas companies rake in billions in profits. The government could immediately cut bills by removing policy costs and the costs of servicing energy debt off bills and onto wealth taxes. They are choosing not to.”

SNP Westminster leader Dave Doogan MP said: “Just one month into the job and Andy Burnham has already broken his promise to cut the cost of living.

“[Energy bills] are now a whacking £563 higher than the Labour Party promised during the election and, instead of reducing the cost of living, like he pledged, Andy Burnham is presiding over yet another big hike in prices.

“Scotland is an energy-rich country and it’s a disgrace that, under Westminster control, we are being forced to pay sky-high prices for a resource we have in abundance.”

Energy Secretary Miatta Fahnbulleh said families will be “understandably concerned,” adding that the VAT cuts will “give families some breathing space.”

“We will keep looking at what more we can do to protect families from unaffordable bills,” she said.