Respected experts Cornwall Insight says early signs are that Ofgem’s price cap for millions of households could jump back to £1,800 a year in July
Worried households risk 10% jump in energy bills in July (Image: GETTY)
Energy bills for millions of UK households risk surging by £160 to £1,800 a year in July because of the Middle East war, experts have forecast.
Industry specialists Cornwall Insight predicts regulator Ofgem will be forced to hike its price cap by 10% on the back of soaring wholesale costs.
The price cap is falling from £1,758 to £1,641 a year for the typical household from April 1 – a reduction of 7%, or £117. The exact amount households pay depends on how much gas and electricity they use.
The biggest reason for next month’s fall is a £150 saving announced by Chancellor Rachel Reeves in her last Budget. Were the cap to jump because of the Middle East conflict, it would wipe out all the benefit.
Cornwall Insight said the predicted rise when Ofgem next reviews the cap reflects the overall surge in global gas markets, with the UK exposed as a net importer.
Price increases are not only felt through the gas bill but also in the electricity bill due to the UK’s reliance on gas for setting the price of power.
It urged caution, however, given that Ofgem’s window for deciding the July price cap has only just opened. The final cap will be based on average wholesale prices over a three month period.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “Looking at the April cap, the role of wholesale prices as a determinant of bills had eased given the impacts of policy costs and network costs.
“However, this latest forecast puts the role of wholesale markets firmly back in the spotlight and illustrates how exposed UK households remain to international market movements.
“While the rise is eye‑catching, any immediate concern should be tempered. We are still early in the assessment period for the July cap, and what happens in the energy markets over the next three months will be the key factor, rather than this spike alone.
“Events like this reinforce the case for greater home-grown renewable generation. Reducing the UK’s reliance on volatile global gas markets is the most durable way to protect households from future price shocks.”