Bill payers across England, Scotland and Wales face a 13% rise in household energy prices on Wednesday as Ofgem's latest price cap takes effect – prompting urgent calls for those without smart meters to submit a reading to avoid being charged at the new, higher rate for previous usage.
The increase, driven by the higher cost of gas following the fallout from the US-Israeli war with Iran, adds £18 a month to a typical dual-fuel bill, with gas bills up 24% and electricity bills up 5%. Standing charges remain largely unchanged.
“Energy prices rise 13% as Ofgem cap kicks in; households urged to submit meter readings.”
Warm weather may limit the immediate impact as households use less energy during summer, but analysts at Cornwall Insight warn that higher prices are likely to persist into the winter. The consultancy predicts only a very slight 0.5% dip in the price cap in October, adding renewed pressure on the government to step in and help those in need.
Ministers point to earlier reforms that cut bills this year, and Chancellor Rachel Reeves has indicated some targeted support could be provided in the autumn – though she may be replaced under new Labour leadership. Prices have not risen as high as feared before the US-Iran truce.
"The Iran ceasefire gave the markets some breathing room, but this is a pause, not a resolution to the conflict," said Craig Lowrey, principal consultant at Cornwall Insight. "What comes out of the final agreement, if there is one, will matter enormously for energy prices. Even in the best-case scenario, the enduring effects from the conflict will be with us for a while."
Ofgem has reduced what it considers a typical level of energy use, now estimating 9,500 kWh of gas and 2,500 kWh of electricity per year, reflecting cutbacks by households and improved efficiency. The cap covers 33 million households in England, Wales and Scotland; regulation and bills differ in Northern Ireland.
Those on fixed tariffs – about 40% of bill payers – will see no change until their deal expires. But for the 60% on variable deals with standard meters, the price comparison site Uswitch advises submitting a reading immediately to ensure they are not charged at the new, more expensive rate.
As prices rise, the Trades Union Congress (TUC) has called for the introduction of a social tariff to reduce the burden on most households. Social tariffs – discounted deals often reserved for benefit claimants – are already available for some broadband and water customers but not for energy.