Households in Great Britain will face the steepest summer rise in energy charges in four years after months of soaring market prices caused the government's energy price cap to climb by 13%. Under the cap, the average gas and electricity bill will increase to the equivalent of £1,862 a year from July until the end of September, up from £1,641 a year in April to June. This rise is driven by global energy market prices, which have been affected by the conflict in the Middle East.
Government Response and Energy Secretary's Statement
Energy Secretary Ed Miliband stated that de-escalating the conflict in the Middle East is essential to bring oil and gas prices down. He called the rise in the price cap deeply unwelcome news for households across the country, emphasizing that the way to achieve lower bills permanently is to accelerate the government's drive for clean, homegrown power.
How the Price Cap Works
Ofgem, the energy regulator for Great Britain, determines the maximum a supplier can charge for each unit of gas and electricity based on the cost of supplying energy to homes, including average wholesale market costs. The cap also includes a maximum daily standing charge. Under the new cap, households paying via direct debit will see electricity charges rise from 24.67p per kilowatt hour (kWh) to 26.11p per kWh, while gas charges will increase from 5.74p per kWh to 7.33p per kWh.
Impact on Households
The jump to £1,862 a year equates to a rise of £18 a month, or £221 a year, for the average household using both electricity and gas. This is the highest level for the cap since the first quarter of 2024, when it was £1,924. During the peak of the energy crisis, the cap reached £4,279 in the first quarter of 2023, but bills were limited to £2,500 a year by the government's energy price guarantee.
Global Factors Driving the Rise
The conflict in Iran has caused the biggest energy supply shock on record, choking exports of oil and gas from the Gulf. In Europe, gas prices have more than doubled from pre-crisis levels and are about three times higher than before Russian gas exports to Europe halted after its invasion of Ukraine. Tim Jarvis, Ofgem's interim chief executive, stated that the rise in the cap is almost entirely driven by the increase in global gas prices due to the Middle East conflict.
Broader Economic Impact
For motorists, the crisis has already pushed petrol prices up by almost 20% to an average of 159.43p a litre, while diesel has increased by more than 30% to 184.96p a litre, according to the RAC. While the rising cost of energy is expected to be painful this summer, the bigger concern is bills from October, when households typically use more energy. The next quarterly change to the cap will depend largely on developments in the Middle East, progress toward a peace deal, and the reopening of the Strait of Hormuz.
Energy Debt and Future Outlook
Rising bills are expected to compound the record levels of energy debt amassed by households since Russia's invasion of Ukraine. Unpaid energy bills reached a record high of £4.5 billion earlier this year, partly paid down by other bill payers through an annual £52 charge included in the price cap. Jarvis advised households to prepare for potentially higher winter bills, possibly by fixing energy tariffs, though this carries risks if prices fall. He noted that while current price rises are not as severe as those following the Russia-Ukraine war, the situation remains highly uncertain.
