Energy bills are projected to soar to almost £2,000 annually by summer due to the recent Iran conflict, as stated by industry experts at Cornwall Insight. The surge in wholesale gas prices has prompted the firm to revise its forecast for Ofgem’s price cap increase by over £330.
While most households benefit from the price cap, limiting the unit rate suppliers can impose, the upcoming cap, effective from April 1, is set to decrease by 7% to an average of £1,641 annually, following measures announced in the recent Budget by Chancellor Rachel Reeves. However, the spike in wholesale energy costs, primarily driven by geopolitical tensions, is expected to offset any savings from the price cap adjustments.
Cornwall Insight’s updated prediction for Ofgem’s July price cap now stands at £1,973, with electricity costs estimated at over £954 and gas costs at £1,018. Dr. Craig Lowrey emphasized that even if wholesale prices stabilize, the recent market volatility will impact the July 2026 cap due to Ofgem’s methodology.
The government is under pressure to intervene and support households as energy bills escalate. While the situation remains uncertain, there are calls for targeted assistance for those most affected. European gas prices have surged, doubling since the conflict began, with further impacts on energy costs expected.
EDF has warned of substantial price hikes in the coming year, and industry experts stress the importance of preparing for potential energy crises. Financial support for vulnerable households and long-term energy reforms are highlighted as essential measures to mitigate the impact of rising energy prices.