Experts are predicting a potential increase in energy bills for millions of UK households by up to £1,800 annually in July due to the ongoing conflict in the Middle East. Cornwall Insight, an industry specialist, foresees a possible 10% rise in the price cap set by Ofgem, driven by escalating wholesale energy costs.
Following a recent reduction from £1,758 to £1,641 per year for an average household starting April 1, attributed to a £150 saving announced in the Budget by Chancellor Rachel Reeves, any increase due to the geopolitical situation could nullify this benefit. Cornwall Insight highlights the global surge in gas markets, emphasizing the UK’s vulnerability as a net importer.
Not only gas bills but electricity costs are also expected to be impacted by the reliance on gas pricing for power generation in the UK. While Ofgem is yet to finalize the July price cap, caution is advised as the decision will be based on average wholesale prices over a three-month period.
Dr. Craig Lowrey, a principal consultant at Cornwall Insight, underscores the importance of monitoring international market movements, emphasizing the need for increased renewable energy generation domestically to shield households from future price fluctuations. In response, a government spokesperson stressed the speculative nature of short-term price predictions and advocated for reducing dependence on volatile fossil fuel markets to mitigate price spikes.