Energy bills still forecast to rise nearly £300 in summer, households warned
Energy bills will rise by around £300 in the summer as conflict in the Middle East continues to impact the UK economy, a leading forecaster has warned.
Cornwall Insight predicts Ofgem’s July price cap will rise to £1,934 from £1,641 in April; That’s an increase of around £300. The respected consultancy has cut its forecast slightly from last week when it set it at £1,973.
This would raise the price cap to the highest rate since July 2023, following record increases in the first year of Russia’s invasion of Ukraine.
Wholesale gas prices have more than doubled since the US attacked Iran in late February and are expected to rise further. The rate has a significant impact on energy costs in the UK and the level at which Ofgem sets the energy price cap.
The forecast comes just one day before the new, lower price cap comes into effect.
Energy Consumers Minister Martin McCluskey said: “This government’s action on bills will see the energy price cap fall from tomorrow. This reduction is fixed until the end of June, protecting millions of households with lower bills this spring.”
The figure for April to June is set in February, meaning bills are effectively protected until July. The energy regulator announced a seven per cent, or £117, cut on that figure, broadly in line with Labour’s pledge to cut energy bills by £150 from the start of the new financial year by scrapping its energy efficiency plan.
Mr McCluskey added: “Tackling the affordability crisis is our number one priority and I know many families will be thinking about how events in the Middle East may affect the cost of living at home.
“We will continue to fight alongside the people in this crisis, and as the Minister of Energy has said, we will intervene if intervention is necessary.”
Explosions continue to be reported in the Middle East during America’s and Israel’s mutual attacks with Iran. As the conflict escalated, Iran warned that the Strait of Hormuz was “closed” and warned that any passage through the waterway would face “harsh measures”.
The strait provides the only passage from the Persian Gulf to the open ocean, making it a crucial point for the oil industry. Approximately 20 percent of the world’s gas and oil is transported by water, and the Iranian threat is causing great damage to global trade.
Donald Trump initially set a March 23 deadline for Iran to reopen Hormuz and threatened to “destroy” the country’s power plants if they did not comply.
But last week, the US president extended that deadline to April 6 in light of the “good and productive” talks that Iran denies taking place.
