Ofgem’s price cap is to rise by 13% from July 1 driven by the ongoing conflict in the Middle East, the regulator has said.
The jump will equate to a rise of £18 a month for the average household using both electricity and gas, with households seeing an increase of 24% on their gas bills and 5% on their electricity bills.
Ofgem chief executive Tim Jarvis said: “Today’s price change reflects continued volatility in global energy markets. This means higher wholesale gas prices, driven by ongoing conflict in the Middle East, is impacting the price we pay for energy.
“We understand many will be concerned about rising prices. While energy use typically falls over the summer months, there are still practical steps households can take to manage costs, including exploring fixed tariffs or changing their payment method. Smart meter customers can also take advantage of half price or cheap electricity at the weekends.
“While our energy supplies remain secure, the best way to limit this exposure is by investing in our energy network. That’s why we’re unlocking the funding needed for the biggest transformation of our lifetime to deliver a system that is secure, resilient and works for consumers across Great Britain.”
Energy Secretary Ed Miliband said: “The rise in the price cap because of a war we did not choose is deeply unwelcome news for households across the country. We know people were under pressure before this crisis, and that’s why easing that burden is our number one priority.
“We will continue to monitor the situation ahead of the winter and plan for all contingencies. In the immediate term it is essential to de-escalate this conflict to bring oil and gas prices down and as Britain faces the second fossil fuel crisis of this decade, we must learn the right lessons.
“The way to get bills down for good and avoid these price spikes is to go further and faster with this government’s drive for clean homegrown power we control. We are upgrading as many homes as possible ahead of winter with the biggest investment in warm homes in British history.”
Ned Hammond, deputy director of customer policy at Energy UK, which represents firms, said: “A rise of this scale will already be a concern for millions of customers but such worries will be magnified if bills remain at this level – or higher – over the winter months.
“So the Government must now focus on how it can best target support later in the year to those customers most in need – in addition to the help suppliers already offer.
“It’s another unwelcome reminder – coming too soon after the last one – of how our country’s high dependence on gas leaves us exposed to price spikes we can do nothing about resulting from conflicts thousands of miles away.”
The price cap refers to the default tariff applied when a customer has not signed for a fixed-rate deal.
It sets a maximum price per unit of gas and electricity, meaning households only pay for the amount of energy they use.
Currently, 40% of accounts – or 22 million – are fixed tariffs, according to Ofgem figures, and are therefore unaffected by this price rise.
Gillian Cooper, director of energy at Citizens Advice, said: “Energy bills are going up again in July, which will be painful news for already-stretched households.
“One of the key tools to help people through this – the energy debt relief scheme – keeps being delayed.
“The scheme should be supporting people struggling with historic energy debt right now and the Government needs to put it in place as soon as possible.
“And as we head into the summer, the Government must use this time to prepare wisely, ahead of autumn.
“Families with children, disabled people and those struggling to pay rent need better targeted support in place before it’s too late.”
