finance
UK Energy Price Cap Forecast to Rise 18 Percent from July Amid Higher Wholesale Costs
The UK's Ofgem energy price cap for typical dual fuel households is projected to increase to £1,929 annually starting July, up from £1,641. This 18 percent rise follows a seven percent reduction in April and stems from elevated wholesale energy prices linked to Middle East tensions. Major suppliers including British Gas and Octopus Energy will see customer bills increase by about £24 monthly.
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The Ofgem energy price cap for a typical dual fuel household in the UK is expected to rise to £1,929 per year from July 1.
This represents an 18 percent increase from the current level of £1,641. The forecast comes from Cornwall Insight, with Ofgem scheduled to confirm the new cap by May 27. ON, OVO Energy, and Octopus Energy.
The changes will apply to households in England, Wales, and Scotland on standard variable tariffs. Vulnerable groups, including those off the gas grid and using heat networks, face heightened impacts.
experienced a seven percent reduction in bills effective April 1, lowering the annual cap by £117 to £1,641.
Energy analysts at Cornwall Insight state that a July increase is unavoidable due to rising wholesale costs observed in March. These costs are attributed to geopolitical tensions involving Iran in the Middle East. Limited expectations exist for significant wholesale price declines in the near term.
Cornwall Insight principal consultant Craig Lowrey noted that summer timing provides some relief, as energy demand reaches its annual low. However, sustained high wholesale prices could amplify the October price cap's effect on household finances.
“A rise in July is pretty much unavoidable, but how high prices go remains to be seen.”
The End Fuel Poverty Coalition has urged the UK government to utilize windfall tax revenues for targeted aid to vulnerable households. The group highlighted risks of increased energy debt for millions already in arrears. Coordinator Simon Francis emphasized the need for faster action on debt relief and long-term measures to stabilize costs.
