From July 1, the average UK household will pay £1,862 for gas and electricity each year. That’s £221 up from now, a rise of 13% that comes when no one’s thinking about their heating bill – summer. It's payers on fixed monthly direct debits who signed up last winter who will feel it first; suppliers adjust those fixed monthly payments using new rates, and those notification letters are landing on doors right now.
For those on direct debit, the new unit rates are 26.11p for electricity and 7.33p per kWh for gas, combined with standing charges of 57.19p a day for electricity and 29.04p for gas. Alone, the standing charges will add up to £315 a year, even before you switch on a single light.
The load is on the gas; a 24% increase there compared to only a 5% rise for electricity means those on electric heating see their bills only tick up slightly, while those on gas will be fully aware how nasty they really are by October in their semi-detached homes.
It's also an opportune time to clear up a misunderstanding that arises each quarter; the cap isn't a limit on your bill, but the unit rates and standing charges are limited by it and the £1,862 price is what a household consuming the average amount will pay. Consume more, and you’ll pay more without any ceiling, the widely-publicised figure being for comparison and not a guaranteed bill. Anyone consuming more or less than the average should factor in more or less than £221.
Why the summer bill hike?
The price cap is set quarterly by the regulator Ofgem, and is influenced by how much suppliers paid for energy on wholesale markets during the three months prior. The price of gas has risen sharply on the back of the Middle East conflict over the spring and with it the price of liquefied gas that the UK now relies on for much of its supply. The knock-on effect has been inflation, which explains why the Bank of England has stopped cutting rates.
"Today's price change reflects continued volatility in global energy markets," said Tim Jarvis, chief executive of Ofgem, when the cap was announced, essentially passing the buck to a wholesale market the regulator doesn't control. Energy Secretary Ed Miliband called the announcement "deeply unwelcome" and blamed "a war we did not choose."
For context, bills remain significantly lower than during the crisis peak of 2022, where typical households were restricted to a maximum of £2,500, but they are more than a third higher than prior to the crisis, and household budgets were based on the previous rate.
The debt issue beyond the figures
The £221 figure is only applicable if bills are paid in full. Millions do not and owe on average £2,270 to their suppliers, a 23% increase since 2023-24, with around two million already in debt to their providers in Great Britain. According to StepChange, 25% of those it represents pay over 20% of their post-tax income on energy, owing an average of £2,646. Vikki Brownridge, the chief executive of StepChange, said that this price rise was "another kick in the teeth." The Fuel Bank Foundation's Matthew Cole said households are "already rationing heating, skipping meals and going without basic essentials."
While consumers rack up debt, the industry as a whole is doing relatively well. Energy companies are estimated to have earned £26.2 billion in the three months to March 2026, around £3 billion of which can be attributed to UK operations. However, this profit is primarily concentrated in production and trading, rather than the retail suppliers who issue the bills, which may not be widely understood or of any relevance to the politics of the situation.
What to do before 1 July
The most helpful step consumers can take is to find a fixed deal cheaper than the upcoming cap. Fixed deals do not fall under the price cap rules, so several companies are currently offering tariffs below the £1,862 price and those who fix now may sidestep the increase for the year ahead. The risk, however, remains that they might lock into a higher tariff if wholesale prices drop before the October cap is set. A decision that depends on a highly volatile war can turn into a gamble.
- Provide a meter reading before 1 July so any June consumption is not included at the higher rates.
- Question if your direct debit is increasing more than the 13%, because providers are meant to be charging you for reasonable consumption, and summer is when your account should be building up credit.
- If you have arrears, ask your supplier for a payment plan before the rise makes the problem worse; suppliers are obliged to provide one.
- Enquire about the Warm Home Discount or a hardship fund; these sources of financial help are available but largely unclaimed.
What's next
By August 26, Ofgem will have published the October to December price cap, which will be of importance this winter. If international tensions cool and the cost of global wholesale energy decreases, then the price cap could drop, otherwise July's £1,862 figure could be the low for the entire winter season. Regardless, energy costs will no longer be perceived as a static outgoing. The cap now changes quarterly and fluctuations are closely linked to war and weather; consumers who take the time to check their energy tariff will save hundreds of pounds over their neighbours who don’t. The same lessons consumers are learning about grocery prices apply here: slow increases tend to go unnoticed, while active research saves money.
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