Energy bills to jump by £221 from Wednesday – but millions handed glimmer of hope
Millions of households will see their energy bills rise from Wednesday as Ofgem's price cap jumps by 13 per cent.
The increase will add an average of £221 a year, or around £18 a month, taking the typical annual bill for a dual fuel household to £1,862.
The rise follows disruption to global energy markets caused by conflict in the Middle East.
Prices climbed after Iran blocked the Strait of Hormuz in response to military action by the US and Israel, disrupting a key shipping route that carries around one fifth of the world's oil and gas supplies.
Natural gas prices, which play a major role in setting UK electricity prices, were particularly affected by the disruption.
However, households may be spared additional increases when autumn arrives, following this month's interim peace agreement between Washington and Tehran.
The deal has allowed the vital Strait of Hormuz to begin reopening in recent days, prompting a decline in both oil and natural gas prices on international markets.
Analysts at Cornwall Insight now expect the price cap to hold relatively stable when the October to December period begins.
This forecast will provide welcome news for consumers who had feared another rise just as colder weather prompts increased heating use.
Ofgem is due to confirm the next quarterly cap level by 26 August at the latest.
Despite the prospect of stable autumn prices, many consumers face a difficult winter unless costs actually fall.
Figures released by Ofgem earlier this week showed households owe a record £4.79 billion to energy suppliers.
The total rose five per cent compared with the previous three months and is 15 per cent higher than the same period last year.
It remains unclear whether the Government will introduce further support for households before winter.
Following Sir Keir Starmer's resignation, the identity of the next Chancellor is also yet to be confirmed, with whoever takes the role expected to face continued pressure over the cost of living.
Rachel Reeves indicated earlier this year that some form of support could be considered in autumn should prices remain elevated.
Meanwhile, Good Energy's chief executive has urged the incoming prime minister to overhaul how the energy market operates, claiming reforms could reduce bills by a further £158 annually.
The renewable supplier's report proposes shifting policy costs from energy bills to general taxation, severing the connection between gas and electricity pricing, and using Bank of England loans to boost clean energy investment.
Nigel Pocklington 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."