UK household energy bills are set to further rise from October by 4% to their highest level since the summer of 2023, as the Iran war has tightened global gas supply and made gas restocking in Europe more difficult and expensive, Cornwall Insight said on Wednesday.
The energy consultancy expects Britain’s energy regulator Ofgem to raise the price cap that energy providers can charge by 4% from October, with household bills rising to their highest level since July 2023 on a unit-for-unit basis.
The UK has a so-called Energy Price Cap in place, which protects households from excessively high bills by capping the price that energy utility providers can pass on to them. The price cap is a limit on what suppliers can charge domestic consumers per kilowatt hour of energy used.
Ofgem, which sets the price cap on a quarterly basis, is expected to raise the annual cap to £1,729 ($2,344) in the October-December period, up from the current £1,663, or $2,254, according to projections from Cornwall Insight.
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The UK energy bills have already jumped by 13% between July 1 and September 30, 2026 under the price cap that Ofgem set in May, as a result of higher wholesale gas prices amid the Middle East crisis.
Ofgem will announce next week the price cap for the period October-December, with expectations of further increases due to the continued crisis with LNG supply from the Middle East and higher gas prices in Europe and Asia.
The projected increase “is being driven by ongoing uncertainty over the US-Iran conflict, with wholesale prices for the coming winter having risen to their highest level in almost four years,” Cornwall Insight said today, adding that the gas supply crunch has been exacerbated by the numerous heatwaves Europe has had to endure this summer.
The surge in energy bills drove inflation in the UK to 2.9% in July, the highest in four months, statistics data showed on Wednesday, with analysts saying that this could be the beginning of a new inflation shock cycle.
By Tsvetana Paraskova for Oilprice.com
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