Energy bills to rise as millions struggle with cost of living: 'People are already rationing'

Energy bills are will rise by more than £200 a year from July in a blow to households who are “already rationing heating, skipping meals and going without basic essentials”.

Regulator Ofgem announced a 13% rise to its energy price cap on Wednesday (27 May). This will set the amount that a typical household can expect to pay in their energy bills from July to September.

Houseolds face paying an extra £221 a year, amounting to an annual bill of £1,862. It comes amid fears of increasing pressures on household budgets as global conflicts push up the cost of fuel and food.

Tim Jarvis, Ofgem CEO, said: “Today’s price change reflects continued volatility in global energy markets. This means higher wholesale gas prices, driven by ongoing conflict in the Middle East, is impacting the price we pay for energy. 

“We understand many will be concerned about rising prices. While energy use typically falls over the summer months, there are still practical steps households can take to manage costs, including exploring fixed tariffs or changing their payment method. Smart meter customers can also take advantage of half price or cheap electricity at the weekends. “

Gas bills are rising by 24% while electricity bills are set to increase by 5%, Ofgem said, reflecting the increased amount of renewable energy generation in the system.

Prices remain below the height of the energy crisis in 2022 when the government intervened to cap annual bills at £2,500.

“While our energy supplies remain secure, the best way to limit this exposure is by investing in our energy network.,” added Jarvis. “That’s why we’re unlocking the funding needed for the biggest transformation of our lifetime to deliver a system that is secure, resilient, and works for consumers across Great Britain.”

In response to the energy price cap announcement, energy secretary Ed Miliband said: “The rise in the price cap because of a war we did not choose is deeply unwelcome news for households across the country.

“We know people were under pressure before this crisis, and that’s why easing that burden is our number one priority. We will continue to monitor the situation ahead of the winter and plan for all contingencies. In the immediate term it is essential to de-escalate this conflict to bring oil and gas prices down.

“As we face the second fossil fuel crisis of this decade, we must learn the right lessons. The way to get bills down for good and avoid these price spikes is to go further and faster with our drive for clean homegrown power that we control.”

Around two million people across the country are already in debt to their energy supplier, according to recent statistics from Energy UK.

Money Wellness, one of the largest free financial advice services in the country, has found that the amount owed to energy providers has increased by 23% over the past three years.

Average energy debt has risen from £1,848 in 2023-2024 to £2,270 in 2025 to 2026.

Rebecca Lamb, head of external relations at Money Wellness said: “Energy prices may have come down from their peak, but energy debt has not followed the same path. Many households are still repaying significant arrears built up over recent years, and those repayments continue to put pressure on already stretched budgets.

“Even a modest increase in the price cap risks pushing some households into further difficulty, particularly where there is already outstanding debt on the account.”

The Fuel Bank Foundation is forecasting annual energy costs of around £1,900 by winter. For the people we support, that could mean roughly another £300 in costs over six months alone.

“Many of these households are already rationing heating, skipping meals and going without basic essentials,” said Matthew Cole, chief executive of the Fuel Bank Foundation.

“That is why we need to prepare for winter now. We need practical, targeted support for the households most at risk, to stop people having to choose between heating and eating, or worse, living without energy altogether.”

The government has expanded the warm home discount which means that millions of families will receive a £150 boost to help them cover their energy bills.

“We know the government is actively considering interventions ahead of this winter, but we urge ministers to act now and use existing mechanisms that can be delivered quickly and automatically,” Cole said.

Read more:

• Benefits, water bill hikes and TV licences: All the tax year changes in April 2026 you need to know
• What will the Middle East conflict mean for UK energy bills?
• What happens if you ignore your bills or can’t afford to pay? Here’s how to get help

What should be done to help people afford their energy bills

Debt charity Stepchange has warned that more people face being dragged into debt due to higher energy bills.

One in four StepChange clients in Great Britain spent greater than 20% of their net income on their energy bills in April 2026 with acerage arrears of £2,646.

Vikki Brownridge, chief executive officer at StepChange, said: “Whilst an increase in the energy price cap was not unexpected, it doesn’t mean it won’t hit household budgets at a time when people are struggling.

“The reality is that despite the reduction in usage over the summer months, this is another kick in the teeth for consumers already struggling to make ends meet. The prospect of managing these bills come winter will be a worry for millions.  

“To prevent an energy affordability crisis and further acceleration in energy debt this winter, the government must provide targeted support through a social tariff which builds on the warm home discount scheme, and work with Ofgem to implement an effective debt relief scheme to support customers with energy debt to repay affordably.”

The Fuel Bank Foundation is also urging the government to introduce a targeted scheme delivering support automatically.

Money Wellness is additionally calling for a national social tariff to be automatically applied to ensure that vulnerable people can afford their energy bills, in a similar way to to the WaterSure scheme.

It has found that up to 87% of people in energy bill debt could meet eligibility criteria for a social tariff, including those in receipt of benefits, those who have experienced long-term debt, or those who have use high levels of energy for essential purposes like for medical equipment.

Meanwhile, debt campaigners have called for windfall taxes on energy companies’ profits to recover money to help affected households.

Energy companies have generated around £26.2 billion in profits in the first three months of 2026, including £3bn in the UK alone, analysis from the End Fuel Poverty Coalition found.

Eva Watkinson, head of campaign at Debt Justice, said: “It’s a scandal that while energy companies continue to post enormous profits. 

“The government has been dragging its feet over introducing an energy debt write-off scheme for over 18 months now. It must immediately act to write off debts that have built up during the cost of living crisis and bring down eyewatering energy bills.”

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