Energy bills are set to increase by £288 in July due to the ongoing conflict in the Middle East, households have been cautioned. Cornwall Insight, an industry expert, raised its latest projection for Ofgem’s price cap by 18% to £1,929 annually. This surge is a result of the soaring wholesale energy costs triggered by the tensions between the US, Israel, and Iran. Cornwall Insight has been continuously revising its forecasts weekly to assess the potential impact on bills.
Ofgem’s price cap restricts the unit rate paid by millions of households on standard variable tariffs, with the total bill dependent on individual usage. Although the cap was expected to decrease by 7% to an average of £1,641 yearly starting tomorrow, recent events in the Middle East and a sharp increase in wholesale gas prices point towards a probable rise in the cap in July.
The looming financial strain on families has intensified calls for targeted government assistance. Cornwall Insight’s updated forecast now stands at £1,929 annually, slightly lower than the previous estimate of £1,973. This adjustment follows a stabilization in wholesale markets after a temporary halt in missile strikes on energy facilities and hopes for a potential ceasefire in the Middle East conflict.
Dr. Craig Lowrey, Principal Consultant at Cornwall Insight, highlighted the unprecedented volatility in energy markets since the outbreak of the Middle East conflict. He emphasized the challenges posed by the damage to infrastructure and disruptions in marine traffic, suggesting an inevitable increase in energy prices come July. The timing of this increase during the summer, when energy demand is typically lower, may mitigate its impact on household expenses.
Minister for Energy Consumers, Martin McCluskey, affirmed the government’s commitment to reducing energy bills and protecting households from escalating costs. As uncertainties persist over future wholesale energy prices, the fluctuation of the price cap over the next year remains a possibility. Ofgem’s quarterly review of the price cap takes into consideration wholesale energy costs along with additional policy costs.
In summary, the ongoing conflict in the Middle East is expected to drive up energy costs for households, prompting calls for government intervention to alleviate the financial burden on families. Stay updated on breaking news stories by following our coverage across various platforms.