Household energy bills ‘set to rise by lower-than-first feared’ in July
British households are facing an average annual increase of £196 in energy bills from July, as the price cap for a typical dual-fuel household is predicted to rise to £1,837. The rise predicted by Cornwall Insight comes amid continued volatility in wholesale markets, worsened by the ongoing conflict in the Middle East.
While this represents a smaller increase than the £332 increase feared at the beginning of March, which would have taken bills to £1,973, experts warn wholesale markets remain unstable. Although the initial price increases have subsided somewhat, consumers will still struggle with significantly higher gas and electricity costs as geopolitical influences continue to drive up energy and oil prices.
Energy regulator Ofgem will announce the next price cap by 27 May. The current cap, set between April and June, has fallen by 7% to £1,641, largely due to the government’s pledge to reduce bills by removing green subsidies.
Anticipating this significant increase in costs, the government said it was exploring more targeted support for households as part of its contingency plan. Additionally, electricity bill support was recently expanded to 10,000 companies, providing some relief to businesses that are not covered by the household price cap.
Wholesale energy costs are not expected to fall to pre-war levels until the Strait of Hormuz, through which one-fifth of the world’s oil and offshore gas, is reopened.
Blockages and disruption of supply, combined with attacks and disruptions to energy infrastructure in the Middle East, have caused gas prices to soar, with the cost of crude oil rising to as high as US$120 per barrel at one stage since the start of the conflict.
