Millions of households across Great Britain were pushed into fuel poverty on Wednesday as the government’s energy price cap rose to the equivalent of £1,862 a year — a £220 annual increase that campaigners warned would force 13.5m homes to spend more than a tenth of their income on energy.
The steepest summer rise in four years takes effect as Ofgem’s new cap lifts electricity rates from 24.67p to 26.11p per kilowatt hour for direct debit customers, and gas charges from 5.74p to 7.33p. The regulator’s new methodology, which assumes lower consumption, puts the typical household bill at £1,663 a year. But for many, the reality is far worse.
“Energy price cap rise to £1,862 a year pushes 13.5m UK households into fuel poverty.”
The End Fuel Poverty Coalition, using University of York research, calculated that almost 5.5m homes now face energy bills consuming about 20% of their income — up from 4.3m in April. “These figures show the reality behind the headline price cap figure: a growing number of households are spending an unsustainable share of their income just to heat their homes in winter and keep them cool in summer,” said Simon Francis, the coalition’s coordinator.
Bill payers without smart meters are being urged by comparison site Uswitch to submit a meter reading immediately to avoid being charged for previous usage at the new, higher rate. The price cap covers 33 million households in England, Scotland and Wales. Northern Ireland has separate regulation.
Price rises, driven by higher gas costs linked to fallout from the US-Israeli war with Iran, may have a relatively limited immediate impact due to warm weather, according to the BBC. But analysts at Cornwall Insight warned the relief could be brief. “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. “Even in the best-case scenario, the enduring effects from the conflict will be with us for a while.”
Cornwall Insight predicts a very slight 0.5% dip in Ofgem’s price cap in October — equivalent to an annual bill of about £1,654 under new assumptions — but with winter approaching, higher usage will magnify the burden. Francis added: “With energy costs rising over the summer, any chance households had to reduce energy debts or build up reserves before the winter heating season will be wiped out.”
Ministers point to reforms that cut bills earlier this year. Chancellor Rachel Reeves had indicated some targeted support could come in the autumn, though she may be replaced under new Labour leadership, and prices have not risen as high as feared before the US-Iran truce. The Trades Union Congress has called for a social tariff to reduce the burden on most households — discounted deals currently available for broadband and water customers, but not energy. Unite has planned protests across the country demanding an immediate deep cut to energy costs.