Millions of households across Great Britain will see the energy price cap increase from today, meaning many customers on standard variable tariffs will begin paying more for their gas and electricity.
The new cap, announced by Ofgem in May, raises the annual cost for a typical dual-fuel household paying by Direct Debit up to £1862 a year. That’s an increase of roughly £221 annually, or 13%, compared to the previous price cap.
While the change comes into effect today, 1st July, the amount households pay will still depend on how much energy they use. To briefly explain the price cap, it limits the maximum amount suppliers can charge per unit of gas and electricity, rather than setting a fixed bill.
Who will be affected?
The rise mainly affects households on standard variable tariffs, which are used by millions of customers across England, Scotland and Wales.
If you’re on a fixed-rate tariff, your prices won’t change until your deal ends. However, anyone whose fixed contract expires in the coming months may move onto a standard tariff unless they choose another fixed deal.
According to Ofgem, the typical household used to calculate the price cap consumes around 2,700 kWh of electricity and 11,500 kWh of gas each year. Households that use more energy will pay more, while those using less will pay less.
Why is the price cap increasing?
The latest rise has been driven largely by higher wholesale gas prices, which suppliers pay to buy energy before selling it to customers.
Global events, including ongoing tensions in the Middle East, have pushed wholesale prices higher during recent months, leading to the increase now coming into force.
Although wholesale markets have shown signs of stabilising recently, prices remain well above levels seen earlier this year, leaving households facing another increase after previous reductions to the cap.
What can households do?
Although the new cap takes effect today, there are still ways to reduce future energy costs.
Some suppliers continue to offer fixed tariffs that are priced below the new cap, providing greater certainty over monthly bills. Before switching, it’s worth comparing deals carefully to ensure any savings outweigh potential exit fees or contract commitments.
Simple measures such as reducing unnecessary energy use, improving home insulation and checking that you’re on the most suitable tariff can also help keep bills under control.
With energy costs remaining significantly higher than historic averages, comparing tariffs regularly could make a noticeable difference over the coming months.
Genius tip: Use our handy comparison tool to find the best deals for you.
