Energy bills to surge by £200 a year from July...

[dutchman]

Analysts urge the Government to consider ‘targeted support’ on households if prices remain high



Household energy bills are on course to jump by £209 a year from July as the Iran war pushes up the price of oil and gas.

Cornwall Insight, the energy consultancy, said it expects the Ofgem price cap to rise by 13pc from £1,641 to £1,850 a year even as warmer summer weather arrives.

The rise in the cap – which limits the average annual energy bill faced by a family home – is worse than earlier predictions by analysts that prices would jump by £196.

The price cap fell by £117 in April after Rachel Reeves, the Chancellor, removed green levies from household bills.

However, the outbreak of war in the Middle East has sent oil and gas prices soaring, putting pressure on suppliers.

Cornwall Insight blamed “rising wholesale prices, which climbed sharply in February and March after US and Israeli missile strikes on Iran”.

It added that Iran’s retaliatory attacks had damaged Gulf energy infrastructure and triggered the closure of the Strait of Hormuz, a crucial shipping route for around 20pc of global oil and gas.

“A temporary ceasefire brought some calm to markets but prices remained elevated throughout the observation window, pushing the July forecast to more than £200 above the current cap,” it added.

The analysts warned the “biggest concern” was what will happen to the cap in October, when energy demand rises as temperatures fall.

A fall on April’s price cap is “unlikely” because of the damage caused to refineries and oil pipelines in the Middle East.

Craig Lowrey, the principal consultant at Cornwall Insight, urged the Government to consider “targeted support” on household bills if prices remain elevated.

Ms Reeves is expected to make an announcement this week on helping families with the cost of living, including potentially scrapping a planned increase in fuel duty.

Mr Lowrey said a summer rise in energy prices “will be painful for households but the bigger concern is October, when household demand traditionally picks up”.

He added: “If the cap stays at a similar level as July, that is when the Government will need to think seriously about targeted support for the most vulnerable.”

Energy providers have urged families to fix their energy bills to avoid the worst of the rising price cap.

Richard Neudegg, the director of regulation at Uswitch, said: “A rise of this magnitude will be alarming, especially with higher costs forecast for the winter too. Thankfully, households can opt out of this price rise if they act now.

“The expected 13pc rise to energy bills is completely avoidable. A number of fixed tariffs currently undercut the predicted price cap, some by over £200 for the average home.”

Ofgem adjusts its price cap every three months and will announce the next level on May 27.

A government spokesman said: “We know families will be concerned about the impact the conflict in the Middle East will have on their energy bills.

“Tackling the affordability crisis is our number one priority. The lesson of yet another fossil fuel crisis is the UK needs to get off the fossil fuel rollercoaster and on to clean homegrown power we control.”