Household energy bills in the United Kingdom are set to climb significantly from July after rising global wholesale costs linked to the Iran conflict pushed up gas prices for the first time.
Energy regulator Ofgem is expected to unveil its latest price cap on Wednesday, affecting millions of households on variable tariffs across England, Scotland and Wales.
Industry analysts are forecasting a 13% increase in the cap. If confirmed, households with average gas and electricity usage could see annual bills rise by about £209, taking the total yearly cost to around £1,850.
The increase comes despite the UK experiencing a record heatwave, with experts urging households to use the summer months to improve energy efficiency and prepare for higher winter costs.
Ofgem reviews the energy price cap every three months. Bills dropped by 7% between April and July following government reforms to charging structures.
However, the next cap covering July to September is expected to reflect a sharp 25% jump in global gas prices triggered by the Iran war and disruptions around the Strait of Hormuz.
Wholesale energy prices account for roughly 40% of household bills, and some suppliers have warned that costs could continue rising into autumn and winter.
The UK government said it is developing targeted support measures for vulnerable households ahead of the colder months, when energy demand typically rises.
An average household is already spending about £600 more annually compared to levels before the 2022-23 energy crisis.
Suppliers are also owed billions in unpaid bills, while many disabled people continue to face high year-round energy costs due to specialist equipment needs.
Around 19 million households in England, Wales and Scotland fall under Ofgem’s price cap system, while Northern Ireland operates under different billing arrangements.
The cap limits the maximum rate suppliers can charge per unit of gas and electricity on variable tariffs. Customers on fixed-rate deals will not be affected until their contracts expire.
Ofgem calculates the cap using a “typical household” model based on annual consumption of 11,500 kWh of gas and 2,700 kWh of electricity, paid through direct debit with combined billing.
The regulator is also reviewing whether its definition of “typical” energy consumption should be lowered, arguing that many households now use less energy because of higher prices and improved efficiency measures.
Critics, however, warn that any adjustment could downplay the scale of rising costs, as consumers would still pay significantly more per unit of energy.
Ofgem previously revised these typical consumption figures in both 2019 and 2023.
Energy UK, which represents suppliers, acknowledged that energy bills remain unaffordable for many households.
The organisation said companies were offering repayment plans, payment breaks and other support options to struggling customers.
Experts noted that many households have already adopted cost-cutting habits such as lowering thermostat settings, reducing shower times, sealing draughts and limiting heating in unused rooms.
They added that taking further steps to improve energy efficiency during the summer could help ease the pressure of higher bills later in the year.
