Millions of households across the UK have been urged to submit up-to-date meter readings before Wednesday 1 July, when Ofgem's energy price cap rises by 13%, according to the Guardian. Failing to do so could result in some June energy usage being billed at the new, higher rates rather than the cheaper June rates, effectively leaving households out of pocket.
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Who is most at risk of being overcharged?
The Guardian reports that an estimated 5.3 million households are on standard tariffs without a smart meter. Because smart meters automatically transmit real-time consumption data to energy suppliers, those without one are reliant on manual meter readings to ensure their account accurately reflects when energy was actually used. Without a reading submitted on or before 1 July, suppliers may estimate usage across the billing period, potentially applying the new higher unit rates to gas and electricity consumed while the old, lower cap was still in force.
Ben Gallizzi, an energy expert at the price comparison website Uswitch, is quoted in the Guardian as saying: "Customers who don't have a smart meter should submit their readings before or on Wednesday 1 July, so their supplier has an accurate view of their account."
How much are rates rising?
The price cap, which is set by the regulator Ofgem, determines the maximum unit rates that suppliers can charge households on standard variable tariffs. According to the Guardian, households paying by direct debit will see electricity charges rise from 24.67p per kilowatt hour to 26.11p per kilowatt hour. Gas charges are set to increase more sharply, rising from 5.74p per kWh to 7.33p per kWh.
Based on these new unit rates, the Guardian reports that the average combined gas and electricity bill will increase by £221, bringing the annual figure to £1,862. The publication attributes this jump in wholesale prices primarily to the war on Iran, which caused a spike in global energy markets.
Why is the cap rising now?
The Guardian explains that the 13% increase in the price cap from July reflects the elevated state of global energy market prices following the Iran conflict. Ofgem reviews and resets the cap on a quarterly basis, and the July figure captures the impact of that market volatility on wholesale gas costs, which feed through into household bills.
There is, however, a partial silver lining noted in the Guardian's report: the higher cap is coming into effect during the summer months, when most households are not using central heating and overall energy consumption is typically at its lowest. This means the immediate financial impact may be less severe than if the same increase had landed in autumn or winter.
What about the October reset?
Looking ahead, the Guardian notes that a further bill rise had been widely predicted when the price cap resets again in October. However, that outcome now appears less certain. The Guardian reports that a recent interim peace agreement signed by the United States and Iran has already led to declines in wholesale gas prices, which could reduce the scale of any October increase, or potentially avoid one altogether, depending on how markets develop between now and the next Ofgem review.
Fixed deals currently cheaper than the cap
The Guardian also reports that, despite the cap rising, households on standard tariffs are not necessarily locked into paying the new higher rates. According to Uswitch's Ben Gallizzi, "there are currently 27 fixed deals available that are cheaper than July's price cap." Gallizzi is quoted as saying: "Although the price cap is going up, your bills don't have to."
The Guardian notes that, at the time of writing, the cheapest deal on Uswitch's best buy table was offered by Outfox Energy, priced at £1,577 a year for the average household, around 15% below the July price cap level of £1,862.
What should households without smart meters do?
According to the Guardian's report, the straightforward action for the 5.3 million households on standard tariffs without smart meters is to take a gas and electricity meter reading and submit it to their supplier on or before Wednesday 1 July. This creates a clear billing boundary, ensuring that energy consumed in June is charged at June's rates, and only consumption from 1 July onwards is billed at the higher unit prices introduced by the new cap.
For households with smart meters, no manual action is required, as readings are transmitted automatically and suppliers will be able to apply the correct rates to the correct periods without any intervention from the customer.
Context: a sustained period of elevated bills
The July increase continues a prolonged period in which UK household energy bills have remained significantly above historical norms. The price cap was introduced by Ofgem as a consumer protection mechanism, but it does not fix the amount customers pay, it fixes the maximum unit rates and standing charges, meaning actual bills vary depending on how much energy a household consumes. The £1,862 annual figure referenced in the Guardian represents a typical household's bill under the new cap, not a fixed charge.
The direction of travel for the October cap will be closely watched by consumer groups and households alike, particularly given the scale of the increases seen in recent quarters and the wider cost-of-living pressures many households continue to face.
Free, impartial debt and money advice is available from StepChange, MoneyHelper and Citizens Advice for anyone struggling with household bills or wider financial pressures.