Household energy bills will increase by 13% from July, as soaring wholesale costs linked to the US-Israel war with Iran affect consumers for the first time.
Regulator Ofgem has confirmed that a typical household using standard amounts of gas and electricity will pay £221 more annually, bringing the average bill to £1,862 per year.
The price cap covers 33 million homes on variable tariffs across England, Scotland and Wales, with suppliers warning bills could climb even higher during the colder winter months.
Energy costs have surged after Iran responded to US and Israeli attacks by effectively blocking the Strait of Hormuz, a critical shipping route for global energy supplies.
A fifth of the world’s oil and gas ordinarily passes through the waterway, making its disruption a significant driver of global price increases.
The average household will see its monthly outgoings rise by £18, with gas bills jumping 24% and electricity bills increasing by 5%, while standing charges remain largely unchanged.
Around 40% of bill-payers are on fixed tariffs and will not be affected until their fixed terms expire, but the remaining majority face the full impact of the cap increase.
The July rise follows a 7% reduction in bills between April and July, a government-initiated change announced just before the Iran war began, meaning many households will have seen only a brief period of lower costs.
Wholesale prices paid by suppliers account for roughly 40% of a household energy bill, and some suppliers have forecast further price increases by autumn and winter.
Ofgem chief executive Tim Jarvis said: “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.”
Energy Secretary Ed Miliband said: “The rise in the price cap because of a war we did not choose is deeply unwelcome news for households across the country. We know people were under pressure before this crisis, and that’s why easing that burden is our number one priority.”
The government has said it is working on plans to provide targeted support for those most in need if bills remain expensive into winter, when households typically use more energy.
A typical household is already paying around £600 more per year than before the 2022-23 price shock, though current bills remain below the levels seen during that earlier crisis.
Billions of pounds in unpaid bills are currently owed to suppliers, and many people with disabilities face high energy costs year-round due to specialist equipment requirements.
Derby resident Julie Clague, aged 59, has been keeping heating off and using an electric blanket to manage costs, saying: “I don’t always heat the home, I heat the person.”
Having qualified for free solar panels through community company YES Energy Solutions, which works with the city council, she expressed optimism about the coming months.
“Last winter was so cold, so I’m really, really looking forward to a cosy winter when the solar panels are going to help me generate some power so I can keep warm,” she said.
YES Energy Solutions chief executive Duncan McCombie, whose organisation distributes energy-saving packs containing radiator keys, draught proofing, and shower timers, said: “People probably feel as though they’ve made changes but can they do more.”
Ned Hammond, deputy director of customer policy at Energy UK, which represents suppliers, said: “It’s another unwelcome reminder – coming too soon after the last one – of how our country’s high dependence on gas leaves us exposed to price spikes we can do nothing about resulting from conflicts thousands of miles away.”