The new change has taken effect from today, Wednesday, July 1
Millions are waking up to higher energy bills today after the energy regulator Ofgem increased its energy price cap by 13%.
The rise, which takes effect from today (July 1), means the average household paying by Direct Debit on a standard variable tariff will see annual energy costs increase from £1,641 to £1,862 under Ofgem’s current typical-use measure. In a message on X, Ofgem warned consumers: “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 price cap is not a cap on your total bill, but instead limits the maximum suppliers can charge for each unit of gas and electricity, plus the daily standing charge. Households that use more energy will still pay more.
From today, households on default tariffs paying by Direct Debit will pay an average:
- Electricity: 26.11p per kWh with a daily standing charge of 57.19p.
- Gas: 7.33p per kWh with a daily standing charge of 29.04p
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Middle East conflict pushed prices higher
Ofgem said the increase has been driven primarily by higher wholesale gas prices following the conflict in the Middle East, although bills remain well below the peak seen during the energy crisis in 2022. The increase affects households on standard variable tariffs, including those paying by Direct Debit, standard credit, prepayment meter and Economy 7 tariffs.
However, millions of customers who have already switched to fixed-rate deals are protected from today’s increase.
Why the real impact may be smaller
Although the cap has risen sharply, many households will not immediately feel the full effect because the higher prices arrive during the summer, when heating use is far lower than in winter. That means the increase in actual monthly bills is likely to be considerably less than it would have been had the rise come during the colder months.
October outlook has improved
There may also be better news on the horizon. 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. The latest figures from energy consultancy Cornwall Insight suggest the October cap could be slightly lower than the July level rather than rising again as previously feared.
Under the current methodology, it is forecasting a cap of about £1,849, around 0.5% below today’s level, although the picture remains highly dependent on wholesale markets over the coming weeks. That is a marked improvement on earlier forecasts, which had suggested households could face another increase heading into winter.
Even so, 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 26 August. In the meantime, consumers who are still on default tariffs are being urged to check whether they can save money by switching to a fixed-rate deal, with many fixed tariffs currently available below the new price cap.
