UK energy bills set to rise 13% to £1,850 from July as Iran war shock keeps gas prices elevated
The UK's energy price cap is forecast to rise to £1,850 per year from July -- a 13% jump adding £209 to a typical household bill -- after Iran's closure of the Strait of Hormuz in response to US-Israeli strikes doubled wholesale gas prices earlier this year, energy consultancy Cornwall Insight said on May 19. Cornwall said autumn bills are unlikely to fall back to April levels even if the war ends, citing "physical damage to infrastructure" and disrupted supply. Chancellor Rachel Reeves is expected to announce a cost-of-living package on Thursday.
Typical household gas and electricity bills in Great Britain are set to rise to £1,850 a year from July, nearly 13% above the £1,641 cap for April-June and an extra £209 on a typical annual bill, according to a forecast for the Ofgem quarterly cap published by the consultancy Cornwall Insight on May 19. The main driver is wholesale gas, which roughly doubled in price after Iran shut the Strait of Hormuz in response to US-Israeli strikes earlier this year.
Ofgem sets the cap on the basis of average wholesale costs in the months leading up to each new period. Prices climbed sharply in February and March as Tehran cut off Gulf energy supplies; at the peak, Cornwall had expected the July cap could reach almost £2,000. A subsequent temporary ceasefire pulled markets back from those highs but did not undo the elevated baseline.
Cornwall warned that the bigger concern is the October cap, when households start using more energy as autumn deepens. Even if the war ended "tomorrow," the firm said, 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, Cornwall's principal consultant, said the government would need to think seriously about targeted support for the most vulnerable if the cap stayed at the July level: "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."
Chancellor Rachel Reeves is expected to announce a cost-of-living package on Thursday, including the cancellation of a planned 1p fuel duty increase scheduled for September and the 5p rise that was due to follow over the next six months. A government spokesperson said tackling the affordability crisis was the cabinet's number-one priority and repeated the argument that the UK needed to "get off the fossil fuel rollercoaster and on to clean homegrown power we control."
Danny Gross, energy campaigner at Friends of the Earth, called the rise "a kick in the teeth for the millions of people already struggling with the cost of living" and pressed for accelerated rollout of renewables and home insulation. In the short term, comparison site uSwitch said a number of fixed-rate tariffs were currently undercutting the predicted July cap and recommended households consider switching for the summer.