UK energy bills are forecast to rise by £209 to £1,850 a year for a typical dual fuel household from July, according to the consultancy Cornwall Insight.
The new energy price cap, set by the regulator, would represent an increase of 13% on the current £1,641 annual bill.
The main driver for the increase is rising wholesale prices, which climbed sharply in February and March after US and Israeli missile strikes on Iran and subsequent retaliatory attacks damaged Gulf energy infrastructure and triggered the closure of the strait of Hormuz, a key shipping route through which a fifth of global oil and gas supplies pass.
A temporary ceasefire brought some calm to markets, but prices remain elevated, pushing the July forecast to more than £200 above the current cap.
Cornwall Insight said:
double quotation markWhile households will be understandably frustrated by a rise during the summer, the impact will be reduced as household energy usage typical falls during the hotter months. The bigger concern is October, when demand picks up again and current forecasts point to a similar cap level as July. While the October cap will depend on how the Middle East conflict unfolds, even if the conflict were to end tomorrow, the physical damage to infrastructure, and lingering effect of disrupted supply, means a fall back to April’s price cap levels in the autumn looks unlikely.
Ofgem is also consulting on a change to its definition of an ‘average household’, known as typical domestic consumption values, to reflect the fact that average household energy use has fallen.