Experts predict that energy bills could rise to nearly £2,000 annually by summer due to the ongoing conflict in Iran. Cornwall Insight, a leading industry analyst, has revised its forecast for Ofgem’s price cap increase by over £330 following a surge in wholesale gas prices.

While most households are protected by the price cap, which sets a limit on supplier charges, the average bill is expected to decrease by 7% to around £1,641 starting April 1. However, the recent spike in wholesale energy costs, triggered by the conflict in the Middle East, is likely to offset these reductions.

Cornwall Insight now projects Ofgem’s July price cap to reach £1,973, with electricity costs estimated at £954 and gas costs at £1,018. Dr. Craig Lowrey, a principal consultant at Cornwall Insight, highlighted that even if wholesale prices stabilize, the impact of recent market volatility will be reflected in the upcoming price cap adjustments.

Given the uncertainty surrounding the conflict, Ofgem reviews the price cap every three months to consider various factors, including wholesale prices, policy changes, and network charges. If the situation escalates, there is a risk that average annual bills could surpass £2,000, prompting calls for government intervention to assist households.

European wholesale gas prices have doubled since the conflict began, further straining energy costs. Energy suppliers and campaigners are urging the government to provide targeted assistance to vulnerable households facing financial strain due to escalating energy prices.

US President Donald Trump’s recent threats in response to the conflict have added to the market uncertainties. EDF, a major UK energy provider, has already warned of substantial bill increases in the coming months, emphasizing the urgent need for proactive measures to support those most affected by the energy price surge.

Matt Copeland from National Energy Action emphasized the importance of addressing the mounting energy debt and implementing financial support programs for low-income households. The focus is on protecting vulnerable families from the impact of rising energy prices and ensuring long-term solutions to reduce energy bills sustainably.