Household energy bills are set to rise by 13% a year from July, after soaring wholesale costs linked to the US-Israel conflict with Iran fed through to domestic prices.
Ofgem said a typical household using gas and electricity will pay £1,862 a year under the new price cap, an increase of £221. That works out at about £18 more a month for the average dual-fuel customer paying by direct debit.
The rise will affect millions of households on standard variable tariffs in England, Scotland and Wales. Energy regulation works differently in Northern Ireland. Customers on fixed tariffs, estimated to be around 40% of bill-payers, will not see prices change until their current deal ends.
The increase has been driven by higher wholesale energy prices after Iran began blocking the Strait of Hormuz, a key shipping route for global oil and gas, in response to the conflict. Suppliers have warned bills could rise again in winter if the disruption continues.
Gas prices will rise more sharply than electricity, with average gas bills increasing by 24% and electricity bills by 5%. Standing charges are expected to remain broadly unchanged.
Ofgem presents the cap as a typical annual bill, based on assumed usage. The current calculation uses 11,500 kWh of gas and 2,700 kWh of electricity a year, but Ofgem plans to reduce this to 9,500 kWh of gas and 2,500 kWh of electricity, reflecting lower household use and improved energy efficiency.
Under the new assumptions, the typical bill would be £1,663, but the percentage rise would remain similar.
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