Ofgem confirms £221 annual increase in energy price cap
Ofgem's energy price cap will increase by £221 a year to £1,862 from July, the energy regulator has confirmed. The 13 per cent increase marks the highest level in over two years and was triggered by spiking oil prices caused by the US-Iran war which began in February.
Customers of major suppliers including British Gas, Octopus, OVO, EON, and EDF will face the extra charges from Wednesday. The rise reflects continued volatility in global energy markets, according to Ofgem chief executive Tim Jarvis.
Government response to affordability crisis
A Labour Party government representative said tackling the affordability crisis is its "number one priority". In a statement a government representative said: "We have taken £150 of costs off energy bills for the years ahead and extended the Warm Home Discount to around six million households."
"We are also freezing fuel duty, rail fares, and prescriptions, increasing the minimum wage, and cutting VAT on family activities and children's meals this summer."
Martin Lewis advises on price cap timing
BBC and ITV star Martin Lewis advises that the price cap is "time-lagged" as it "reflects the wholesale energy costs from two to five months before, so it's slow to rise and slow to fall".
"That's why the Middle East conflict will only finally force its way onto most people's energy bills from July, when the Cap will rise 13 per cent," he said. He added: "The rise only applies to firms' bog-standard tariffs. Fixes aren't price-capped, so won't rise. So if you're on the Price Cap, consider getting off it, if you can."
54-year-old Mr Lewis advises: "As your winner depends on region and usage, the simple way is to do a whole-of-market comparison and lock in a fix below the current Cap. Do that and you start saving straight away – and then from July, today's cheapest fix will be 15 per cent cheaper than the new higher Cap."
Ofgem chief executive comments on market volatility
Ofgem chief executive Tim Jarvis said: "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."
