Household energy bills to ‘soar £250 in months’ for one reason | UK | News
No matter how quickly the Iran conflict is resolved, energy costs may remain painfully high for years; Analysts warn that the damage to global gas markets has become so deep that it will outlast any ceasefire.
Consultancy LCP Delta, which advises the government on the UK energy market, crunched the numbers and came to a striking conclusion: wholesale electricity is expected to be around 40 per cent more expensive this year than before the war began; prices will remain 18 percent above pre-conflict levels by 2026.
Chris Matson, a partner at LCP, said: “Consumers are protected in the short term by the price cap, but ultimately these increases will be reflected in consumer bills.”
The gas market tells an even more striking story. While LCP Delta puts average prices 70 percent above prewar forecasts for the current year, it eases to just 36 percent above baseline by 2027. Crucially, these figures assume no further deterioration; it merely reflects what is already happening in the Middle East.
Why will the pain continue
The mechanism driving the long-term outlook is storage. Even if tankers carrying liquefied natural gas begin clearing the Gulf again tomorrow, months of near-zero flows have left European reserves badly depleted.
Replenishing them will keep demand, and therefore prices, going until the end of next year, regardless of what happens on the front lines.
The weight given to LCP Delta’s evaluation is significant.
The firm is among companies specifically commissioned by the Government to map scenarios for the UK energy market; This means that its consequences will land directly on ministerial desks.
Reeves faces increasing pressure
The predictions sharpen calls for the Chancellor to take action. Rachel Reeves faces growing demands to build a financial lifeline for households and businesses that could lead to a sustained and significant rise in energy costs.
Industry body Energy UK calculated that bills could be £250 a year higher from July as a result of the war alone and demanded ministers “immediately step up efforts” to protect the most vulnerable from future increases.
On Monday Sir Keir Starmer announced £53 million in emergency support for households affected by a spike in heating oil prices, which have more than doubled in a matter of weeks.
The fund will be transferred to the new Crisis Resilience Fund from April and will remain in the Household Support Fund until that point. But the £250 increase will seriously disrupt Starmer’s plans to cushion the Middle East oil shock.
