We’re moving on to other personal finance and consumer news now, but first here’s a round-up of all the key things to know about the energy price cap…
Big rise in annual energy bills
Average annual energy bills are set to rise 13% from July for a typical dual fuel household.
Energy regulator Ofgem has pushed the price cap to £1,862 a year from July, up from the previous cap of £1,641, making bills £18 more expensive a month for an average household on a supplier’s standard default tariff.
The energy price cap is the sum most households pay for gas and electricity when paying by direct debit, so if you use more, you’ll pay more.
Ofgem says higher wholesale gas prices are still being driven upwards by the ongoing Middle East conflict, which is affecting the price we pay for energy.
How to undercut the cap
Comparison site Uswitch told consumers to be proactive after the announcement, urging households on standard and default tariffs to “take action now” and look into switching.
“Households can currently lock in a rate that undercuts the July cap by around £250 for the average home,” Richard Neudegg, director of regulation at Uswitch, said.
“For anyone still on a standard tariff, your bill will go up unless you act.”
Changes to assumed usage
Ofgem said many UK households had cut back on their energy usage, allowing the regulator to cut its Typical Domestic Consumption Values (TDCVs), the assumed annual energy usage of an average household, for the first time since 2023.
But while this means the headline “typical annual bill” looks lower, the price you pay per unit of energy is going up, not down.
That means if you use the same amount of energy as you did last quarter, you could end up paying more from July, not less.
Bills set to rise even more
While today’s increase is the biggest jump for energy bills in years, experts are warning the real concern is what comes next.
As we get into the colder months, trusted forecaster Cornwall Insight is predicting bills will rise to £1,899 a year for a typical consumer from October, when Ofgem sets its new price cap.
That price cap is still being assessed and will likely depend heavily on the state of the war in the Middle East. But experts warn that even if the conflict is resolved tomorrow, a fall back to April’s price cap levels looks unlikely.
