Households are being urged to act before July’s energy price rise takes effect, as new research suggests millions have little or no cushion against another increase in essential bills.
Ofgem’s price cap will rise by 13 per cent from 1 July, taking a typical annual dual-fuel bill from £1,641 to £1,862 under the regulator’s existing measure of typical use. That is an increase of around £18 a month for an average household paying by direct debit, if the level were sustained for a year.
The rise comes as research from Compare the Market suggests 22 per cent of people have no savings at all, while many others have far less set aside than the unexpected costs they may face.
Almost seven in 10 adults have faced a significant surprise expense, according to the research, with average emergency savings falling £7,443 short of the average large unexpected bill.
Clare Stinton, senior personal finance analyst at Hargreaves Lansdown, said: “It is lower-income households who will be most vulnerable to the hike in energy costs headed for us this July. This is due to essential costs making up a much bigger proportion of their monthly outgoings, meaning there is less headroom for change in their budget.”
Why the price cap is rising
The price cap affects households on standard variable tariffs, rather than those on fixed deals.
Ofgem said the increase reflects higher wholesale gas prices, linked to continued volatility in global energy markets.
The regular added 40 per cent of accounts are on fixed tariffs and will not be affected by the July cap rise.
Households on standard tariffs, or those whose fixed deals are ending soon, now have a short window to check whether they can cut costs before bills increase.
Should you fix your energy tariff?
A fixed tariff can protect you from July’s rise, but it is not automatically the right option for everyone.
Andrew Capstick, utilities editor at MoneySavingExpert, says: “If you're on your provider's standard tariff, which most households are, your prices are controlled by the Price Cap, which we know will rise by 13 per cent on 1 July.
“Right now, some of the cheapest fixes are below today's Price Cap rates. That means fixing could cut costs now and protect you from the upcoming July hikes.
“The key is to compare deals using a whole-of-market comparison tool - like MoneySavingExpert's Cheap Energy Club to find the best deal for your usage and region.”
It’s also worth checking for exit fees. Variable tariffs usually have no exit fee, but fixed deals may charge one. Suppliers cannot charge an exit fee if you are in the last 49 days of your deal.
How to challenge a direct debit rise
Capstick says: “Under Ofgem rules, providers must set fair direct debits, give clear explanations of why it's chosen the amount, and refund credit if you ask for it back.
“If your direct debit feels too high, speak to your provider and ask for an explanation. Give an up-to-date meter reading, and if your account is in credit, request that your payments are lowered to reflect your actual use.
“If you're struggling to pay, the best thing to do is speak to your supplier - it's obligated to help you if you're falling behind.”
A fix should be judged against your own usage, not the headline annual figure. The price cap is not a cap on your total bill, but on the unit rates and standing charges, so households that use more energy will still pay more.
Before switching, check the unit rates, standing charges, length of the fix and any exit fees, as well as whether the deal requires a smart meter or online account management.
What to do if you cannot afford the rise
Energy arrears are a priority debt, meaning they should be dealt with before many other debts.
Emily Whitford, senior public policy advocate at StepChange Debt Charity, says average bills have risen by 44 per cent since 2021, while energy debt is estimated by Ofgem at £4.55 billion across Britain.
“While it may seem tempting to rely on credit to help bridge the gap between your income and your essential costs, the reality is that this could worsen or prolong debt problems, and if you are in this situation you could benefit from reaching out for free and impartial debt advice from a charity like StepChange,” she says. “This will help you understand your options and find a path forward to dealing with any debts.”
Anyone already behind should ask their supplier about a repayment plan based on what they can afford, rather than agreeing to an amount that risks pushing other priority bills out of reach.
It is also worth checking whether you qualify for the Warm Home Discount when the next scheme opens, or any local hardship support through your council.
A tariff check, meter reading and direct debit review now could stop July’s rise becoming a bigger debt problem later.
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