Households with four bedrooms or more are facing additional charges of £329 per year on average from Wednesday as the new energy price cap takes effect. On July 1, Ofgem’s energy price cap will increase by 13% or £18 per month to £1,862 per year for the average household using both electricity and gas, reports Express.co.uk.
Price Cap Increase Driven by Global Conflict
The rise, which is driven by the ongoing conflict in the Middle East, is up £221 on current levels. The price hike is attributed to spiralling global energy costs as a result of the conflict. However, according to energy price comparison and switching service Uswitch, for homes with four bedrooms or more, housing four to five people, the extra costs are forecast to be even higher.
Higher Usage Means Higher Bills
High usage four-bedroom homes with a typical annual energy consumption of 17,000kWh of gas and 4,100 kWh of electricity face an annual average energy bill rise of £329 from July 1, according to Uswitch. Four-bedroom homes with this typical energy consumption currently have an annual bill of £2,302 on average under the April price cap, but from July the average annual bill will jump to £2,631 - a jump of £329.
The energy price cap sets a maximum price that suppliers can charge customers in England, Scotland and Wales for each unit of gas and electricity they use, as well as a maximum daily standing charge, which is the cost of having your home connected to the grid. Gas costs per kWh are rising from 5.74p to 7.33p from July 1 – a 28% rise and the highest level since September 2023, while electricity rates are going up by just under 6%.
Price Cap Updated Every Three Months
The price cap is updated every three months, meaning the increase from July 1 will be in effect until September 30. But the price cap only sets the maximum amount that suppliers can charge for each unit of electricity and gas that households use, not the total bill, so ultimately, households that use more energy will pay more.
Fixed Deals Offer Savings
The July 1 price hike is avoidable, though, with research from Uswitch showing there are currently 27 fixed energy deals available across the market that undercut the new July rates, with the cheapest offering savings of £285 against the upcoming price cap. Ben Gallizzi, energy expert at Uswitch.com, said: “There are currently 27 fixed deals available that are cheaper than July’s price cap, with average savings of £285, so act now to save yourself money. It’s important to run a quick comparison to see options tailored to your personal energy usage. The price cap is going up, but your bills don’t have to.”
To avoid being affected by a change in the price cap, households can switch to a fixed rate as this allows you to lock in a price that will remain unchanged for the length of your contract – effectively protecting you from further increases if the price cap rises again.
Outlook for October
Analysts at Cornwall Insight have said they believe the energy price cap will remain fairly steady when it changes again in October. Ofgem is due to announce the next price cap level for October to December on or by August 26. Chancellor Rachel Reeves said earlier this year she would consider some form of support in the autumn if necessary and if energy prices remain high.
