Ofgem has confirmed the energy price cap will rise 13% from July
Today’s announcement from Ofgem follows a spike in wholesale gas prices(Image: Natalia Gdovskaia via Getty Images)
Families are being advised to make a change within weeks or face being hit by a surge in the price cap on tariffs from July. The energy regulator today announced that the annual bill for a typical household on a standard tariff will jump by 13% – or £221 – from £1,641 to £1,862.
It represents the steepest increase since the energy crisis and heaps additional pressure on millions of families already grappling with the cost of living. Comparison website Uswitch warned that households can save money by making a switch which could save approximately £250 annually, with the most affordable fixed tariff currently on offer from Fuse Energy costing £1,614 for a typical home.
Richard Neudegg, director of regulation at Uswitch, said: “July’s serious price rise is the biggest jump we have seen in years, but the real concern is what comes next. Millions of households will soon see their energy rates rocket. With prices forecast to stay high, the real pain will come when the heating goes back on in the autumn and through winter.
“Households are on a standard variable tariff by default – so if you haven’t switched, your rates will go up in July unless you take a good fixed deal. No one wants to think about winter during hot weather, but fixing your energy deal now means you can opt out of these rises entirely.
“Households can currently lock in a rate that undercuts the July cap by around £250 for the average home. For anyone still on a standard tariff, your bill will go up unless you act.”
Today’s announcement from Ofgem follows a spike in wholesale gas prices triggered by heightened tensions across the Middle East. Ofgem chief executive Tim Jarvis said: “Today’s price change reflects continued volatility in global energy markets. This means higher wholesale gas prices, driven by ongoing conflict in the Middle East, is impacting the price we pay for energy.”
During an appearance on BBC Radio 4’s Today programme, Mr Jarvis cautioned that elevated prices could persist throughout winter and encouraged households to make preparations. He suggested consumers might “try to fix in the market” now to “insulate them against some of that volatility”.
Campaigners have warned the increase will pile further financial pressure on families already facing hardship. The End Fuel Poverty Coalition revealed that average annual bills will now stand £820 higher than in winter 2020/21 – representing a 79% surge.
Simon Francis, coordinator of the coalition, said: “Behind every energy price rise are households whose direct debits are about to rise, families whose energy debt is harder to clear, and pensioners whose summer is already overshadowed by the winter ahead.
“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 also cautioned that suppliers might immediately raise direct debit payments in anticipation of increased winter consumption.
The coalition noted that gas unit costs have jumped 28% compared to the previous quarter and 16% year-on-year, while electricity prices have remained broadly flat. Research conducted by Uswitch reveals that approximately two-thirds of households on standard tariffs are unaware that prices are set to climb, despite the majority stating that even a 10% hike would put a strain on their finances.
The price cap impacts roughly 60% of British households who remain on default variable tariffs. It restricts the unit rates and standing charges that suppliers are permitted to impose, though total bills are still determined by how much energy is consumed. Experts are also cautioning that a further rise could follow in October should global gas markets continue to face pressure.
