The price cap for household energy prices set by Ofgem will lift by 13 percent or £18 a month from July 1 – experts have urged for more action to bring bills down
Brits are in for another hefty spike in energy costs as experts have urged the Government to bring down bills.
From Wednesday, household energy prices are set to rise by a whopping £221 a year, further hitting the pockets of hard-working Brits following spikes after the outbreak of the war in Ukraine in 2022 and the US-Israeli war on Iran earlier this year.
The price cap set by Ofgem will lift by 13 percent or £18 a month from July 1 to £1,862 a year for the average household using both electricity and gas. It comes aft erh the conflict in the Middle East sent global energy costs soaring.
There could be brighter news from October, thanks to retreating wholesale costs after the US and Iran agreed a deal to end the war.
Winter of discontent
Energy costs rocketed after Iran responded to US and Israel attacks by blocking the crucial Strait of Hormuz shipping route, through which a fifth of the world’s oil and gas is carried.
This month’s interim peace deal has seen the vital route begin to reopen in recent days, which has helped bring down oil and natural gas prices, with the latter being a key driver of power bills in the UK.
Analysts at Cornwall Insight said they now believe the energy price cap will remain fairly steady in October. This will come as a relief after fears the cap would rise again in October, just as households turn on their heating for the cooler months.
Ofgem will announce the next price quarterly cap level for October to December on or by August 26. It leaves a question mark over whether the Government will launch any targeted energy support for the winter months.
While it is unclear who the Chancellor will be later this year, given the change in leadership after Keir Starmer resigned, cost of living and bills pressures will be top of their inbox.
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. Even though energy bills may not go up further in October, many will face a payment shock in the winter months unless prices come down.
Figures earlier this week from Ofgem showed debt owed to energy suppliers reached a new record high of £4.79 billion in the three months to March – a five percent increase on the last quarter and 15 percent higher year on year – as many people struggled with rising bills.
‘We need to urgently reform the way the market operates’
The boss of renewable energy supplier Good Energy has called on the incoming prime minister to reform the energy market, with measures he claims could cut bills by an extra £158 a year.
In a report called Rewiring the Market: How to Tackle the Hidden Causes of High Energy Bills, Good Energy is urging the Government to look at moving policy costs off energy bills and into general taxation, break the link between gas and electricity prices and incentivise clean energy investment with Bank of England loans to invest in renewable energy projects.
Nigel Pocklington, chief executive of Good Energy Group, said: “Over the past five years, we have witnessed a series of energy shocks due to conflict abroad, proving that our current system is neither fit for purpose nor structured in a fair way for households to pay for their energy.
“We need to urgently reform the way the market operates to deliver and incentivise a cleaner, more affordable energy system.”
He added: “The next prime minister must set out a clear plan for how Britain will move away from high gas prices and bring bills down for good.”
The Mirror has approached the Department for Energy Security and Net Zero for a response to Mr Pocklington’s comments.
A Government spokesperson told The Guardian: “We have taken £150 of costs off energy bills for the years ahead and extended the warm home discount to around 6 million households. We are going further and faster to move on to homegrown energy we control, including taking decisive action to break the influence of gas on electricity prices, to better protect households from energy crises.
