British households are bracing for a substantial energy cost increase this summer. Starting in July, average energy bills are projected to rise by £288 annually. This shift is attributed to the anticipated Ofgem price cap increase to £1,929 for a typical dual fuel household, marking an 18% rise from the current cap of £1,641.
Upcoming Price Hike Details
This monthly increase translates to approximately £24. Major energy suppliers, including British Gas, EDF, E.ON, OVO Energy, and Octopus Energy, will implement these higher charges. Analysts from Cornwall Insight indicate that this price hike is largely driven by rising wholesale energy costs linked to ongoing geopolitical tensions.
Timing of the Increase
The July increase comes shortly after an earlier seven percent reduction in energy bills was observed on April 1. This drop, which resulted in a £117 annual savings, ended just before the new forecasted rise. According to Cornwall Insight’s principal consultant Craig Lowrey, the impending increase is now practically unavoidable.
Impact on Households
The End Fuel Poverty Coalition has criticized the upcoming increase, dubbing it a “Trump Tax” due to its connection to instability in the Middle East affecting oil and gas prices. Simon Francis, the coalition’s coordinator, noted that households are facing yet another shock after a temporary reduction in prices. Vulnerable populations, particularly those not connected to the gas grid, may feel the greatest impact.
- Estimated annual bill increase: £288
- Projected new price cap: £1,929
- Monthly increase: £24
- Current price cap: £1,641
- September price forecast: Uncertain, could be higher if wholesale prices remain elevated
Call for Government Support
In light of these developments, the coalition has urged the government to redistribute windfall tax revenues to assist households in need. They called for prompt actions to address energy debt and to implement longer-term strategies to stabilize costs. Key measures could include enhancing energy efficiency and promoting the use of domestic renewable energy sources.
Ofgem is set to announce the official new price cap by May 27. This change will impact households across England, Wales, and Scotland who are on standard variable tariffs.
