BBC Breakfast correspondent Peter Ruddick has issued an urgent call to customers of major energy suppliers including Octopus Energy, British Gas, E.ON Next, OVO, EDF, and Scottish Power to take a meter reading today, July 1, as a 13% increase to Ofgem's price cap takes effect. Failure to do so will result in some households paying higher power bills for energy already consumed at the new, more expensive rates.
An estimated 5.3 million households on standard tariffs who do not have a smart meter are urged to act to avoid being overcharged. Ofgem's price cap sets the maximum amount suppliers can charge homes on standard or default tariffs per unit of gas and electricity.
New Rates and Impact on Households
Households paying via direct debit will see electricity charges rise from 24.67p to 26.11p per kilowatt hour, while gas charges increase from 5.74p to 7.33p per kWh. Based on these new rates, the average annual gas and electricity bill will rise by £221 to £1,862. The increase is driven largely by higher wholesale gas prices linked to the Middle East conflict.
Appearing on BBC Breakfast, Mr Ruddick explained: “The energy price cap is set by the industry regulator every 3 months and determines the maximum per unit price for gas and electricity if you’re on a standard or default tariff. From today, the level of the price cap will go up by 13%, meaning the average equivalent annual bill will be just over £1,862. This is an average for a typical use household on a dual fuel tariff paying by direct debit. The hope is that because this sharp rise comes in summer when we typically use less energy, the impact won’t be as severe.”
Monthly Increase and Wholesale Factors
Mr Ruddick noted the monthly impact is about £18 more on average, but emphasized per-unit prices matter most. Gas prices saw a bigger percentage increase due to higher wholesale costs from the Middle East conflict. Standing charges, the daily fee to maintain the network, remain largely unchanged from the previous three months.
He added: “The good news is that the current forecast is for a very slight fall in the price cap in October. Oil and gas prices have come off their recent highs thanks to the ceasefire in the Middle East, but while that ceasefire remains fragile, the outlook for prices remains uncertain. The real key today is to take a meter reading and, if you are on a standard variable tariff, check if you could get a better deal by fixing.”
Expert Advice and Government Response
Uswitch energy spokesman Ben Gallizzi echoed the advice: “There are two crucial things you should add to your to-do list – submit a meter reading and get a cheap fixed energy deal. Millions of households should take a moment to read their meter at the end of the month to avoid being overcharged due to higher prices kicking in from July.”
Minister for energy consumers Martin McCluskey said: “We know families are deeply concerned about rising energy bills because of a war we did not choose. The action we took at the budget, which has taken an average £150 off energy bills, is now factored into bills for years to come. We have also expanded the Warm Home Discount scheme, which benefited around six million households last winter and will remain in place for the rest of the decade. We will continue to monitor the situation ahead of winter and plan for all contingencies, while doubling down on our mission for clean power to bring down bills for good.”
Future Outlook and Winter Concerns
The jump in the price cap comes as latest forecasts from Cornwall Insight suggest bills are set to remain high throughout winter, falling by only around 0.5% in October compared to July, as the US-Iran 60-day ceasefire helps stabilize wholesale gas markets. However, conflicting reports on the reopening of the Strait of Hormuz, patchy peace talks, and uncertain timelines for repairing regional infrastructure mean prices remain high, if less volatile than in spring.
Cornwall expects a typical household to face a bill of £1,849 from October. While Ofgem is updating its definition of a typical consumer from July to reflect falling household energy use, adjusting the headline figure to £1,654, Cornwall said this represents “little change” on a like-for-like basis. July’s higher prices will be cushioned by warmer weather, but the October cap will land as people switch heating back on, having a greater impact on household finances.
Prices rocketed after Iran responded to US and Israel attacks by blocking the Strait of Hormuz shipping route, through which a fifth of the world’s oil and gas is carried. Ofgem will announce the next quarterly price cap level for October to December on or by August 26.
