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Energy consultancy Cornwall Insight has projected that typical household energy bills in the UK could rise by £332 starting in July. This estimate is subject to change as it is influenced by ongoing fluctuations in global energy prices. The increase is largely attributed to the ongoing conflict involving the US and Israel against Iran, which has driven oil and gas prices higher. Future changes in energy costs will ultimately determine the final impact on household bills.
The energy regulator, Ofgem, is scheduled to announce the new price cap for energy bills on 27 May. This cap, which limits the maximum price per unit of gas and electricity for standard variable tariffs, will be based on wholesale prices recorded in March, April, and May. The cap is updated quarterly, but actual bills will vary according to individual household consumption. Cornwall Insight forecasts that from July through September, a typical dual-fuel household could face an annual energy bill of approximately £1,973, up from the current £1,641.
The recent surge in wholesale energy prices occurred during the first three weeks of March, yet the final price cap will also factor in price movements in the following ten weeks leading up to the end of May. The cap applies to standard dual-fuel customers paying by direct debit, limiting the charge per unit of energy consumed. As political pressure mounts in response to the anticipated sharp rise in household energy costs, the government faces calls to offer financial support. Debate continues over whether assistance should be universal to all households or concentrated on low-income and vulnerable groups. Tailored support would allow greater aid to those most in need while reducing overall costs amid fiscal constraints.
Chancellor Rachel Reeves recently indicated that any forthcoming support would target poorer households, with the Treasury considering various options. This approach contrasts with the government’s response following the 2022 Russian invasion of Ukraine, when a broad support package worth over £35 billion was provided to all bill payers regardless of income. Additionally, the November Budget introduced measures that reduced energy bills by £150 through the removal of certain charges; without this, Cornwall Insight’s latest forecast suggests typical annual bills would have exceeded £2,000.
At the same time, the International Energy Agency (IEA) has urged governments and businesses worldwide to implement measures aimed at curbing energy consumption. Given ongoing volatility in oil and gas markets, the IEA recommends actions such as lowering speed limits by 10 km/h and encouraging remote work. Several Asian countries have already adopted rules limiting air conditioning temperatures, and others have shortened school hours, restricted air travel for officials, and introduced four-day workweeks for public servants in nations like Pakistan and the Philippines.
The IEA further advises promoting public transportation, restricting private car use in city centers on alternating days, encouraging car sharing, and avoiding air travel where possible, especially business flights. Additionally, it suggests switching to electric cooking methods and conserving liquid petroleum gas (LPG) for essential uses by transitioning bio-fuel vehicles to gas. These demand-side interventions are described as “a critical and immediate tool” for enhancing energy affordability and security. Fatih Birol, executive director of the IEA, cautioned that without a quick resolution to the Middle East conflict, energy market disruptions and economic consequences will worsen. However, he emphasized that the proposed measures could help to “shelter consumers” from severe impacts
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