UK Energy Price Cap Forecast to Rise 18% in July, Impacting Household Bills

The Ofgem energy price cap for typical dual-fuel households in the UK is expected to rise to £1,929 per year from July 1, an 18% increase from the current £1,641 level set in April.

This adjustment will affect customers on standard variable tariffs across England, Wales, and Scotland. Ofgem is scheduled to confirm the new cap by May 27. ON, OVO Energy, and Octopus Energy. Analysts at Cornwall Insight base the forecast on wholesale energy market trends observed in March.

Rising costs during that period, connected to geopolitical tensions involving Iran, have influenced the cap calculation. Energy demand typically reaches its lowest point in summer, which may mitigate some financial strain on households. However, if wholesale prices remain high, the October price cap could impose further increases.

Cornwall Insight principal consultant Craig Lowrey stated that a July rise is unavoidable, though the exact level depends on ongoing market developments.

“A rise in July is pretty much unavoidable, but how high prices go remains to be seen.”

experienced a 7% reduction in bills effective April 1, lowering the annual cap by £117 to £1,641. This followed higher prices in prior periods. The upcoming increase reverses part of that relief amid volatile global energy markets. The End Fuel Poverty Coalition highlighted risks to vulnerable households, including those off the gas grid or using heat networks.

These groups may face heightened financial pressure, potentially exacerbating energy debt. The coalition has urged the government to deploy windfall tax revenues for targeted support and to accelerate measures addressing energy debt. Simon Francis, coordinator of the End Fuel Poverty Coalition, noted that the rise could push more households into crisis.

He called for faster government action on debt and long-term strategies like improving energy efficiency and expanding renewables. Such steps aim to stabilize costs and allow households to benefit from cheaper clean power sources.

energy prices showed limited signs of significant decline in the near term, according to analysts. Geopolitical factors, including Middle East conflicts, continue to drive volatility in oil and gas markets. This environment contributes to the upward pressure on consumer bills.

The price cap regulates rates for standard variable tariffs but does not cover fixed-rate deals or direct debit discounts. Suppliers must adhere to the cap, ensuring no charges exceed the set limits. Policymakers face calls to reform electricity pricing to better reflect renewable energy benefits.

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