UK Energy Bills to Rise £200 to £1,850 From July, Forecast Warns

Households in Great Britain face an increase of more than £200 a year in energy bills, pushing typical annual costs to nearly £1,900 from July, according to a new forecast. The analysis from Cornwall Insight describes the rise as “a kick in the teeth” for millions already struggling with the cost of living crisis.

A typical annual gas and electricity bill is now projected to reach £1,850 from July under the quarterly price cap set by Ofgem, the industry regulator. The forecast is based on wholesale energy market trends and follows a sharp increase in gas prices after the Iran war disrupted global supplies.

The expected increase is nearly 13% higher than the £1,641 cap set for April to June, adding £209 to a typical annual bill. Cornwall Insight attributed the surge to a doubling of UK gas market prices earlier this year following the conflict in Iran.

The main driver for the rise is increasing wholesale energy prices, according to Cornwall Insight. Prices climbed sharply in February and March after Tehran effectively cut off Gulf energy supplies by shutting the Strait of Hormuz in response to US-Israeli strikes on Iran.

Ofgem determines the maximum price per unit of gas and electricity based on the cost of supplying energy to homes, including average wholesale market costs in the months leading up to each new cap period.

A temporary ceasefire allowed markets to retreat from historic highs recorded in March, when Cornwall estimated the cap could have risen to nearly £2,000 a year. However, market prices have remained significantly above normal levels, dealing a blow to households already contending with rising costs of essentials such as council tax and water.

Although the summer energy cap rise will cause immediate pain, analysts express greater concern about bills from October, when households typically consume more energy. Higher winter consumption could lead to even greater financial strain.

Cornwall Insight said that even if the Iran war ended immediately, “the physical damage to infrastructure, and lingering effect of disrupted supply, means a fall back to April’s price cap levels in the autumn looks unlikely.”

Craig Lowrey, principal consultant at Cornwall Insight, said: “If the cap stays at a similar level as July, that is when the government will need to think seriously about targeted support for the most vulnerable.”

Lowrey added: “Building out our renewable capacity is the only real path to bills that aren’t as exposed to events thousands of miles away. It won’t be cheap, and bills will not see an immediate drop, but that is the direction of travel if we want genuine, lasting stability.”

Danny Gross, an energy campaigner at Friends of the Earth, said: “Yet another rise in energy bills will be a kick in the teeth for the millions of people already struggling with the cost of living. If we’re to break free from our dependence on fossil fuels, then we must rapidly roll out clean, homegrown renewable energy – which is now cheaper than oil and gas – alongside insulating homes. This is how we can permanently lower bills and shield people from another energy price crisis.”

In the short term, switching websites have urged households to consider fixed-rate energy deals. According to uSwitch, several fixed tariffs currently undercut the predicted July price cap, potentially saving money on summer bills and possibly winter costs if the cap remains at similar or higher levels.