What will it mean for your household?
Higher prices will kick in from July(Image: Getty Images)
Energy bills are set to rise by £221 a year from Wednesday as Ofgem raises its price cap by 13 per cent.
The increase amounts to an additional £18 per month for the average household. The energy price cap will climb to £1,862 annually for a typical household for those paying by direct debit in England, Scotland, and Wales.
This represents an increase from the current £1,641 cap for a typical household.
The price cap determines the maximum amount you can be charged for unit rates and standing charges – meaning your bill could be higher or lower than the price cap figure. Households who pay via direct debit will see electricity charges rise from the current rate of 24.67p a kilowatt hour to 26.11p, while gas charges will rise from 5.74p a kWh to 7.33p.
You can use your existing bills to gauge how much your energy costs will change by using our interactive calculator below:
The price cap determines the maximum amount you can be charged for unit rates and standing charges – meaning your bill could be higher or lower than the price cap figure.
Ofgem has attributed the hike to elevated wholesale gas prices, driven by the continuing conflict in the Middle East. The cap remains below the levels seen during the peak of the energy crisis in 2022, when the government imposed a ceiling on bills of £2,500.
The energy price cap doesn’t set a maximum on your total bill, instead it limits what energy firms can charge for daily standing charges and individual unit rates.
National Energy Action has warned that households already struggling with their bills now face a summer of ongoing financial pressure and uncomfortable and unsafe homes.
It fears that without action, the response to people struggling to pay their bills will shift towards tighter debt collection, including a greater use of forced prepayment meters – which risks some households losing access to heating and energy altogether.
Adam Scorer, Chief Executive at National Energy Action, said: “The price cap rise should be a red energy warning. Energy inefficient homes take lives in winter and will increasingly threaten the most vulnerable in summer.
“Fuel poverty means many cannot experience a comfortable and safe temperature at home, because the building fabric makes it impossible or the cost of doing so makes it prohibitive. This is a public health emergency for the most vulnerable and needs to be addressed as such.
“The cap rise is another blow for millions already struggling. The legacy of the energy crisis is millions of households locked into debt they cannot repay, and that is pushing up bills for everyone. If we fail to act, we risk seeing more households forced onto prepayment and effectively cut off from energy. That cannot be the answer to a problem caused by unaffordable bills.
“We need urgent action to clear this debt and stop costs being baked into the system. The right response is to scale debt relief. As our new paper, Clearing the Decks, sets out, that means enabling and expanding Ofgem’s Debt Relief Scheme with additional funding so more of this debt can be cleared, reducing harm and lowering costs across bills.”
Millions of Britons, meanwhile, have been urged to submit energy meter readings to avoid paying higher bills than they need to as the price hike takes effect.
The estimated 5.3 million households on standard tariffs who do not have a smart meter have been urged to take action to avoid paying for energy they have already used at the new, more expensive rates that take effect from Wednesday.
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.”
