Millions of households face higher energy bills from today, Wednesday, July 1, as Ofgem's quarterly price cap rises by 13%. The increase brings the average annual cost for a household paying by Direct Debit on a standard variable tariff from £1,641 to £1,862, based on typical usage.
What the New Cap Means for Households
Ofgem warned consumers on X: "The quarterly energy price cap will rise by 13% from today. This will be an increase of around £18 per month for the average household." The regulator stressed that the cap limits the maximum suppliers can charge per unit of gas and electricity, plus the daily standing charge, not the total bill. Households using more energy will pay more.
From today, default tariff customers paying by Direct Debit will pay an average of 26.11p per kWh for electricity with a daily standing charge of 57.19p, and 7.33p per kWh for gas with a daily standing charge of 29.04p.
Drivers Behind the Increase
Ofgem attributed the rise primarily to higher wholesale gas prices following the conflict in the Middle East. However, bills remain well below the peak seen during the 2022 energy crisis. The increase affects households on standard variable tariffs, including those paying by Direct Debit, standard credit, prepayment meter, and Economy 7 tariffs. Customers who have already switched to fixed-rate deals are protected from this rise.
Why the Real Impact May Be Smaller
Although the cap has risen sharply, many households may not immediately feel the full effect because the higher prices arrive during summer, when heating use is far lower than in winter. This means the actual increase in monthly bills is likely to be considerably less than it would have been had the rise occurred during colder months.
Outlook for October
There may be better news ahead. Falling wholesale gas prices following an easing of tensions in the Middle East have improved forecasts for the next price cap, which will apply from October to December. Energy consultancy Cornwall Insight suggests the October cap could be slightly lower than the July level, at about £1,849—around 0.5% below today's level. This is a marked improvement on earlier forecasts that had predicted another increase heading into winter.
Analysts warn that the outlook remains uncertain because Ofgem's final calculation will depend on wholesale prices over the observation period before the regulator announces the new cap by August 26. In the meantime, consumers on default tariffs are urged to check whether they can save money by switching to a fixed-rate deal, as many fixed tariffs are currently available below the new price cap.
