Millions of Britons have been urged to submit energy meter readings to avoid paying higher bills than necessary as a 13% jump to the price cap takes effect. The estimated 5.3 million households on standard tariffs without smart meters should take action to avoid paying for energy already used at the new, more expensive rates from Wednesday.
Price Cap Details
Ofgem's price cap sets the maximum amount firms can charge homes on standard tariffs per unit of gas and electricity. 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 the new rates, the average gas and electricity bill will increase by £221 to £1,862 a year. The jump is largely driven by a spike in global energy wholesale prices caused by the Middle East conflict.
Expert Advice
Uswitch energy spokesman Ben Gallizzi said: “There are two crucial things you should add to your to-do list for the coming days – 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 for their energy due to higher prices kicking in from July.”
Government Response
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, and we are determined to fight their corner to tackle energy affordability. The action we took at the budget, which has taken an average £150 of costs off energy bills, is now factored into bills for the years to come. We have also expanded the Warm Home Discount scheme, which benefitted 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 the winter and plan for all contingencies, while doubling down on our mission for clean power to bring down bills for good.”
Winter Outlook
The price cap jump comes as latest forecasts suggest bills will 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, according to Cornwall Insight. However, it warned conflicting reports on the reopening of the Strait of Hormuz, patchy peace talks, and uncertain timelines for repairing key 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.
Impact on Households
While July’s higher prices will be cushioned by warmer weather and lower household energy use, 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. This leaves a question mark over whether the Government will launch targeted energy support for winter. While it is unclear who the Chancellor will be later this year, given the change in leadership after Sir Keir Starmer resigned, cost of living and bills pressures will be top of their inbox. Chancellor Rachel Reeves said earlier this year she would consider some form of support in autumn if necessary and if energy prices remain high. Even though energy bills may not rise further in October, many will face a payment shock in winter unless prices come down. Figures earlier this week from Ofgem showed debt owed to energy suppliers reached a record high of £4.79 billion in the three months to March – a 5% increase on the last quarter and 15% higher year on year.
