The UK energy price cap will increase to £1,862 per year from July, a £221 annual rise due to soaring wholesale costs from the Iran conflict. Chancellor Reeves holds off on immediate support, while campaigners fear a difficult winter.
Energy bills for UK households are set to rise by £221 per year after Donald Trump's military actions in Iran caused wholesale energy costs to skyrocket.
The energy price cap, which regulates the cost for two-thirds of British households not on fixed-term contracts, will increase to £1,862 per year starting in July. This marks a 13% increase, or an extra £18 per month, compared to the April cap of £1,641. Yearly energy bills have not been this high since January 2024. Further increases are anticipated when the cap is reviewed again in October, as temperatures drop and energy demand rises.
The price cap sets a maximum unit price for gas and electricity, meaning households only pay for the energy they use. While this provides some relief during the warmer summer months when consumption is lower, concerns are mounting about even steeper hikes this winter. Advocacy groups are urging the government to implement targeted support for the most vulnerable households.
However, Chancellor Rachel Reeves did not introduce any immediate energy measures in her recent cost-of-living plan, a departure from the universal support offered by the previous Conservative government in 2022 during the Russia-Ukraine energy crisis. Reeves stated in Parliament: 'We stand ready to act if market conditions worsen significantly later this year and I have been leading cross-Government contingency work on design of potential future targeted and temporary support for businesses.
' The surge in energy costs is largely attributed to Iran's blockade of the Strait of Hormuz, a critical shipping route for about a fifth of the world's oil and gas. Households have not yet felt the full impact because the price cap is reviewed quarterly.
In April, the cap actually dropped by 7% due to government measures such as shifting 75% of the cost of the renewables obligation from household bills to general taxation and scrapping the energy company obligation scheme. Ofgem Chief Executive Tim Jarvis commented: '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 added: '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. To help people facing higher costs, the Chancellor acted last week to freeze fuel duty and made bus travel free for children across England in August.
We have taken £150 average costs off energy bills for the years ahead and we have also extended the warm home discount for around six million families. 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.
' Campaigners warn of an extremely difficult winter ahead for the most vulnerable without extra bill support. Simon Francis, coordinator of the End Fuel Poverty Coalition, stated: 'Households need reassurance and support, not a summer of suspense. That means the Government must act before winter to spell out what support will be available.
' The government insists that tackling the affordability crisis is its number one priority
Energy Bills Price Cap Iran Conflict UK Households Wholesale Costs
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