Typical energy bill to rise by 221 a year from July due to Iran war

Household energy prices are expected to increase by 13% a year in July as wholesale costs rise following the impact of the Iran war. Ofgem says a typical household using gas and electricity will pay 221 more per year, bringing the annual bill to 1,862. The price cap applies to millions of homes on variable tariffs in England, Scotland, and Wales, while Northern Ireland has different regulation. The cap sets the maximum charge per unit of gas and electricity for variable tariffs. About 40% of customers on fixed tariffs are unaffected until their fixed term ends. The increase is driven by Iran blocking the Strait of Hormuz, which carries a fifth of the world’s oil and gas, and suppliers warn bills could rise further in winter. Ofgem bases the typical bill on reduced usage and improved efficiency, which may mask the full impact of higher unit prices.

"Household energy prices will rise by 13% a year in July, as soaring wholesale costs caused by the impact of the Iran war hit bills for the first time. Regulator Ofgem says the conflict will mean a household using a typical amount of gas and electricity will pay 221 more a year, with an annual bill of 1,862. The cap affects millions of homes on variable tariffs in England, Scotland and Wales, and suppliers are warning that it could go even higher at home in the colder winter months without a resolution thousands of miles away."

"Energy costs have been sent rocketing by Iran's move to block the crucial Strait of Hormuz shipping route, through which a fifth of the world's oil and gas is carried. The jump will equate to a rise of 18 a month for the average household using both electricity and gas, with households seeing an increase of 24% on their gas bills and 5% on their electricity bills. The energy cap covers millions of households in England, Wales and Scotland."

"The cap fixes the maximum amount customers can be charged for each unit of gas and electricity via variable tariffs. About 40% of bill-payers have fixed tariffs and are unaffected because their price will not change until the end of their fixed term. The cap is illustrated by Ofgem, by calculating the annual bill for a "typical household" using 11,500 kWh of gas and 2,700 kWh of electricity a year with a single bill for gas and electricity, settled by direct debit."

"Ofgem has decided to reduce what it believes to be a "typical" level of energy use, because many households have cut back owing to high prices of recent years, and energy efficiency has improved. That could mask what remains a sharp rise in prices, and will not change the fact that consumers will pay considerably more for each unit of energy. The "typical" bill under current usage estimates will be 1,862 (a rise of 221 a year) The "typical""

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