Household energy prices are set to increase by 13% from July 1, according to Ofgem, the energy regulator. The price cap rise, driven by the ongoing conflict in the Middle East, will add approximately £18 per month to the average dual-fuel household bill.
Impact on Households
The typical household now faces an annual energy cost of £1,862, an increase of £221 from current levels. Gas bills will rise by 24%, while electricity bills will increase by 5%. Early forecasts suggest further increases in October.
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."
He advised households to take practical steps to manage costs, such as exploring fixed tariffs, changing payment methods, or taking advantage of half-price electricity at weekends for smart meter customers.
Government Response
Energy Secretary Ed Miliband described the rise as "deeply unwelcome news" but emphasised the government's commitment to easing the burden. He said: "The way to get bills down for good and avoid these price spikes is to go further and faster with this government's drive for clean homegrown power we control."
The government is upgrading homes ahead of winter with what Miliband called "the biggest investment in warm homes in British history."
Industry and Consumer Groups React
Ned Hammond, deputy director of customer policy at Energy UK, said: "A rise of this scale will already be a concern for millions of customers but such worries will be magnified if bills remain at this level – or higher – over the winter months." He called on the government to target support to those most in need.
Gillian Cooper, director of energy at Citizens Advice, said: "Energy bills are going up again in July, which will be painful news for already-stretched households." She urged the government to implement the energy debt relief scheme as soon as possible.
Cause of the Rise
Energy costs have surged due to Iran's blockade of the Strait of Hormuz, a crucial shipping route carrying a fifth of the world's oil and gas. Cornwall Insight forecasts that the cap in October will remain at a similar level, even if the conflict ends soon, due to infrastructure damage and disrupted supply.
Campaigners warn of an "extremely difficult winter" ahead for the most vulnerable. Simon Francis, co-ordinator of the End Fuel Poverty 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."
Currently, 40% of accounts (22 million) are on fixed tariffs and unaffected by this rise, according to Ofgem.
