Millions of households across Great Britain are waking up to sharply higher energy bills on Wednesday as the regulator's latest price cap takes effect, pushing the number of homes in fuel poverty to 13.5 million.
The cap on gas and electricity rates has risen to the equivalent of £1,862 a year under Ofgem's previous methodology, or £1,663 under new calculations that assume lower consumption. The jump follows months of volatility on global gas markets, driven by the fallout of the US-Israeli war with Iran.
“Energy price cap rise pushes 13.5m households into fuel poverty as typical bill surges by £220 a year.”
For a typical household, the rise amounts to £18 a month, with gas bills surging 24% and electricity up 5%, while standing charges remain almost unchanged. The new cap covers 33 million households in England, Wales and Scotland.
Fuel poverty campaigners warn the increase will force 13.5 million homes to spend more than 10% of their income on energy, up from almost 11.3 million in April. The End Fuel Poverty Coalition, which based its calculations on research by the University of York, said almost 5.5 million households now face energy costs equivalent to about 20% of their income, a sharp rise from 4.3 million in April.
Simon Francis, the coalition's coordinator, said: “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.” He 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.”
The price cap, set by Ofgem, applies to variable tariffs. Around 40% of households on fixed deals will not see an immediate change, but those without smart meters are being urged to submit a meter reading immediately. Price comparison site Uswitch warned that failing to do so could mean previous usage being charged at the new, higher rate.
Analysts at Cornwall Insight said the higher prices, driven by gas costs linked to the Iran conflict, are likely to persist into winter. Principal consultant Craig Lowrey said: “The Iran ceasefire gave the markets some breathing room, but this is a pause, not a resolution to the conflict. 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.”
Cornwall Insight has predicted a very slight 0.5% dip in the cap in October, bringing the typical bill to £1,654 under the new methodology. That offers little comfort as households head into the colder months, when gas use increases.
The Trades Union Congress has called for the introduction of a social tariff to reduce the burden on most households, while the union Unite has planned protests across the country. Ministers point to earlier reforms to cut bills, and Chancellor Rachel Reeves has indicated some targeted support could come in the autumn, though she may be replaced under new Labour leadership.
With energy costs high and winter approaching, the question remains whether the government will step in before millions more are forced to choose between heating and eating.