Bill payers across England, Scotland and Wales are being urged to submit a meter reading as household energy prices rise by 13% on Wednesday, driven by the fallout of the US-Israeli war with Iran and the higher cost of gas.
Anyone whose tariff is affected by regulator Ofgem’s price cap and does not have a smart meter should take a reading immediately to avoid previous usage being charged at the new, higher rate, according to price comparison website Uswitch. The jump equates to an extra £18 a month for a household using a typical amount of electricity and gas, with gas bills up 24% and electricity up 5%. Standing charges are almost unchanged.
“Household energy prices rise 13% as Ofgem price cap kicks in, meter readings urged”
While the impact may be limited by warm weather and lower energy use in summer, analysts at Cornwall Insight warn that higher prices are likely to persist into winter. The consultancy has predicted a very slight 0.5% dip in Ofgem’s price cap in October, adding renewed pressure on the government to step in to help those in need.
Ministers point to reforms to cut bills earlier this year. Chancellor Rachel Reeves had indicated some targeted support could be provided in the autumn, although she may be replaced under new Labour leadership, and 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 decided to reduce what it considers a “typical” level of energy use, because many households have cut back owing to high prices in recent years and improved energy efficiency. Its new estimate is 9,500 kWh of gas and 2,500 kWh of electricity a year. The energy cap covers 33 million households in England, Wales and Scotland; regulation and bills differ in Northern Ireland.
About 40% of bill payers are on fixed tariffs and will not see any change until their deal expires. Others on variable deals with standard meters should submit readings now. 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 are discounted deals often reserved for those on certain benefits, available to some broadband and water customers but not on energy bills.