UK household energy bills to rise by 13% from July to two-year high
Ofgem’s cap increase means annual costs will increase to £1,862
The price cap on British household energy bills will rise by 13 per cent from July to the highest level in more than two years, fuelled by the energy shock from the Middle East war.
The new cap announced by Ofgem means annual energy bills will rise to £1,862 for a typical household between July and September, up £221 and reaching the highest level since the first quarter of 2024.
The latest figures will pile pressure on the Labour government, which has promised to cut energy bills.
Ofgem’s interim chief executive Tim Jarvis said on Wednesday: “It is likely that we are going to see elevated prices this winter.”
British wholesale gas prices are about 60 per cent higher because of the conflict in the Middle East, as disruption around the Strait of Hormuz threatens roughly a fifth of global LNG trade.
However, the energy shock has been cushioned to an extent by the increased use of renewable energy in the UK, such that price rises have been less sharp than in 2022 in the aftermath of Russia’s full-scale invasion of Ukraine.
In April, the UK government introduced measures intended to soften the impact of the Middle East crisis, saying at the time that the combined steps would shave about £150 off annual energy bills.
But consultancy Cornwall Insight said that in addition to the latest price cap rise, households were likely to face a further increase later this year, estimating that the cap would rise by another 2 per cent to £1,899 in the winter.
Ed Miliband, energy secretary, said the price rise was “deeply unwelcome news” for households. Easing the burden was “our number one priority”, he said, pointing to the government’s recent decision to freeze fuel duty and its efforts to insulate homes.
“We will continue to monitor the situation ahead of the winter and plan for all contingencies,” Miliband added.
The rise in energy bills is likely to fuel further calls for more financial support for households.
Chancellor Rachel Reeves announced a package of measures earlier this month, including targeted cuts to agrifood tariffs, to help people with the soaring cost of living.
But she will not allocate any money to help households facing higher energy bills over the summer, instead waiting until the autumn, when help will be targeted towards the poorest.