UK Energy Price Cap Rises 13 Percent from July 1

Households across the UK will see their energy bills climb by £221 annually from Wednesday. Ofgem’s price cap is set to increase by 13 per cent, or £18 a month, from 1 July, pushing the average annual electricity and gas bill to £1,862. This significant rise was initially fuelled by soaring global energy costs, largely due to the Middle East conflict.

The situation intensified when Iran, in response to US and Israeli attacks, blocked the critical Strait of Hormuz, a passage through which a fifth of the world’s oil and gas is transported.

An interim peace deal reached this month has seen the vital shipping route begin to reopen. This has already contributed to a reduction in oil and natural gas prices, with the latter being a key determinant of UK power bills. Analysts at Cornwall Insight now predict the energy price cap will remain relatively stable in October.

Ofgem will announce the next price quarterly cap level for October to December on or by August 26.

Figures earlier this week from Ofgem showed debt owed to energy suppliers reached a new record high of £4.79 billion in the three months to March. The total represents a 5% increase on the last quarter and 15% higher year on year. The boss of renewable energy supplier Good Energy has called on the incoming prime minister to reform the energy market.

In a report called Rewiring the Market: How to Tackle the Hidden Causes of High Energy Bills, Good Energy is urging the Government to move policy costs off energy bills and into general taxation, break the link between gas and electricity prices and incentivise clean energy investment with Bank of England loans.