Energy bills are projected to increase by £288 in July due to the ongoing conflict in the Middle East, households have been cautioned. Cornwall Insight, a leading industry expert, has raised its latest forecast for Ofgem’s price cap by 18% to £1,929 annually. This surge is a result of escalating wholesale energy costs stemming from the conflict between the US, Israel, and Iran. Cornwall Insight has been continuously updating its forecasts due to the potential impact on bills.
Ofgem’s price cap sets the unit rate paid by millions of households on standard variable tariffs, with the overall bill depending on their usage. Despite the cap initially expected to decrease by 7% to an average of £1,641 annually, recent developments in the Middle East and a doubling of wholesale gas prices suggest a probable increase in July.
The heightened risk of financial strain on families has increased pressure on the government to offer targeted assistance. Cornwall Insight’s latest forecast of £1,929 is slightly lower than the previous estimate of £1,973 annually. This adjustment follows a stabilization in wholesale markets after a pause in missile attacks on energy infrastructure and hopes for a potential ceasefire in the conflict.
Dr. Craig Lowrey, Principal Consultant at Cornwall Insight, highlighted the unprecedented volatility in energy markets due to the Middle East conflict. He emphasized the challenges in predicting future price fluctuations and the potential impact on household energy costs. Ofgem revises its price cap every three months, taking into consideration wholesale energy costs and additional expenses.
Minister for Energy Consumers, Martin McCluskey, acknowledged the government’s efforts to reduce energy bills and protect households. He assured ongoing support for families facing financial challenges amid the uncertain impact of events in the Middle East. The government remains committed to addressing affordability concerns and intervening if necessary.
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