More than two million households have been pushed into fuel poverty overnight as the energy price cap rose to its highest level in four years on Wednesday, leaving 13.5m homes spending more than a tenth of their income on gas and electricity.
The annual bill for a typical household under the government’s cap jumped to the equivalent of £1,862 — a rise of more than £220 — after months of volatility on global gas markets linked to the US-Israeli war with Iran. Ofgem’s new price cap, covering 33 million households in England, Wales and Scotland, increased by 13% from midnight, forcing families on variable tariffs to pay 24% more for gas and 5% more for electricity.
“Energy price cap rises 13%, pushing 2.2m more households into fuel poverty as typical bill hits £1,862.”
Bill payers without smart meters were urged to submit a reading immediately to avoid being charged for previous usage at the new, higher rate. “If you’re on a variable deal, take a meter reading now,” said Uswitch, the price comparison site. About 40% of customers on fixed tariffs will not see an immediate change.
The jump — described by the End Fuel Poverty Coalition as ‘the steepest summer rise in four years’ — means almost 5.5m households now spend about 20% of their income on energy, up from 4.3m 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.” The charity’s calculations were based on research by the University of York.
The crisis has forced the union Unite to plan protests across the country, while the Trades Union Congress has called for the introduction of a social tariff for energy, similar to those already offered to some broadband and water customers.
The price rise stems from the fallout of the US-Israeli conflict with Iran. Analysts at Cornwall Insight said higher energy costs were likely to persist into winter. “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. “Even in the best-case scenario, the enduring effects from the conflict will be with us for a while.”
The consultancy predicted a very slight 0.5% dip in the price cap in October, which would leave the typical bill at £1,654 under the regulator’s new assumptions. Ministers point to reforms that cut bills earlier this year, and Chancellor Rachel Reeves has indicated 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.
With temperatures set to drop, Francis warned the situation could worsen. “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,” he said.