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UK Energy Price Cap to Rise 13% as Middle East Conflict Drives Up Gas Costs

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UK Energy Price Cap to Rise 13% as Middle East Conflict Drives Up Gas Costs

The UK Office of Gas and Electricity Markets, or Ofgem, on Wednesday announced a 13% increase in the domestic energy price cap for the third quarter due to rising wholesale gas prices stemming from the ongoing war in the Middle East.

Under the regulator's current typical domestic consumption values, the typical annual energy bill for an average household paying by direct debit is set to rise to 1,862 pounds sterling from 1,641 pounds starting in July.

While this increase is the first since the conflict in the Middle East began, Ofgem noted that prices "remain well below" the peak of the 2022 energy crisis when the government intervened to limit bills at 2,500 pounds.

Around 40% of households are on fixed tariffs and will not be impacted by the July hike, the regulator said. For others, gas bills will jump 24%, while electricity rises just 5%, which Ofgem attributed to growing renewable energy generation.

"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," Ofgem Chief Executive Officer Tim Jarvis said, adding they are funding the "biggest transformation" in a generation to build a "secure and resilient" energy system for Great Britain.

Reacting to the news, UK Energy Secretary Ed Miliband wrote in a post on social media site X that the "rise in the price cap because of a war we did not choose is deeply unwelcome news for households across the country." Looking ahead to winter, Miliband said the government is planning for "all contingencies," adding that de-escalation of the conflict is vital to lowering the price of global oil and gas prices.

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