Millions of UK households have been urged to submit meter readings immediately as a 13% hike in the energy price cap takes effect from Wednesday, July 1. The estimated 5.3 million households on standard tariffs without a smart meter risk being overcharged for energy already used at the new, more expensive rates.
Price cap changes and impact on bills
Ofgem's price cap sets the maximum amount energy firms can charge homes on standard tariffs per unit of gas and electricity. From July, those paying via direct debit will see electricity charges rise from 24.67p per kilowatt hour to 26.11p, while gas charges increase from 5.74p per kWh to 7.33p. This means the average gas and electricity bill will rise by £221 to £1,862 a year.
The increase is largely driven by a spike in global energy wholesale prices caused by the Middle East conflict, according to industry analysts.
Expert advice: submit meter readings and switch deals
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.”
Gallizzi emphasised that submitting a meter reading ensures households are billed at the old, lower rates for energy used before the hike.
Government response and support measures
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.”
Outlook for winter and future price caps
Cornwall Insight expects that following the jump in the price cap, bills will remain high throughout the winter, falling by only around 0.5% in October compared to July, as the US-Iran 60-day ceasefire helps stabilise wholesale gas markets. However, the lack of clarity on the reopening of the Strait of Hormuz and the intermittent nature of peace talks means prices remain high, though less volatile than in spring. Cornwall predicts a typical household bill of £1,849 from October.
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.
People may not notice the initial impact of July's higher prices due to warm weather and lower energy use, but come October, as households switch heating back on, the financial impact will likely be felt. After Iran responded to US and Israel attacks by blocking the Strait of Hormuz, prices skyrocketed.
Ofgem will announce the next quarterly price cap level for October to December on or by August 26. It remains unclear whether the government will launch targeted energy support for the winter months. Chancellor Rachel Reeves earlier said she would consider support in autumn if necessary and if energy prices remain high.
Even if energy bills do not rise further in October, many will face a payment shock in winter unless prices come down. Figures from Ofgem show debt owed to energy suppliers reached a record high of £4.79 billion in the three months to March – a 5% increase on the previous quarter and 15% higher year on year.
