Energy prices shot up by 13% today after the regulator Ofgem increased its price cap, prompting urgent warnings for millions of households to submit meter readings or risk being overcharged. The rise means a typical household will now pay £1,862 a year – up £221 from April – adding roughly £18 to monthly bills.
The hike is driven by the ongoing conflict in the Middle East, which analysts say is pushing up global gas prices through uncertainty over peace talks and the critical Strait of Hormuz. The strait handles 20% of the world’s natural gas, and experts warn that future bills hinge on the deal struck between the US and Iran. Craig Lowrey, principal consultant at Cornwall Insight, said that even in the best case scenario the impact of the war would be felt for months to come.
“Energy prices rise 13% as Ofgem price cap hikes typical bills by £221, with Middle East conflict driving costs until at least winter.”
Chancellor Rachel Reeves has hinted at means-tested support in the autumn, though her position is uncertain under a potential incoming cabinet led by Andy Burnham. Meanwhile, National Energy Action said the recent heatwave underlined the need for better energy efficiency and debt relief for those falling behind. British energy suppliers were owed £4.79bn by consumers by the end of March.
Martin Lewis, founder of Money Saving Expert, urged consumers to lock in cheaper fixed deals that launched on the same day as the price cap rise. “Everyone on standard-rate tariffs will see their price rise tomorrow … Ironically, at the same time, there’s a few new cheap fixes launching – letting you lock-in far cheaper,” he wrote. Among the best offers, Lewis cited Fuse Energy at 17.2% less than the cap for new customers on a 13-month fix, Outfox at 16.5% less on a 15-month fix, and Eon at 15.4% less on a 12-month fix for both existing and new customers.
But Lewis told the Commons Public Accounts Committee that standing charges – the fixed daily fees – are “by far and away the thing that drives people mad the most”. Ofgem has also revised down its definition of “typical” consumption to reflect changing habits and better efficiency. The price cap covers 33 million homes, but around 40% of British households on fixed rates are unaffected.
Consumers without smart meters are being urged to submit a reading immediately to avoid being charged the higher rate for energy used before the cap change. Authorities also warned of scams involving fraudsters posing as government or energy company officials. With analysts predicting elevated bills until at least winter, the pressure on household finances shows little sign of easing.