Typical energy bill forecast to rise by £332 a year in July

Typical annual household energy bills could go up by £332 in July, energy consultancy Cornwall Insight calculates, although the figure is likely to change.

The forecast reflects the surge in oil and gas prices as the US-Israel war on Iran continues, and could rise further or fall back depending on where energy prices go next.

The energy regulator Ofgem will set the July cap on energy bills for households on 27 May, based on wholesale prices in March, April and May.

The cap sets a maximum price for each unit of gas and electricity and is changed every three months. Actual bills depend on the amount of energy used.

Cornwall Insight's latest forecast predicts that, under Ofgem's price cap for July to September, a dual-fuel household using a typical amount of gas and electricity would pay £1,973 a year, up from the current £1,641.

Wholesale energy prices jumped in the first three weeks of March, but the final cap will also depend on what happens to prices in the remaining 10 weeks before the end of May.

The cap is updated every three months and fixes the maximum amount customers can be charged for each unit of gas and electricity on a standard - or default - variable tariff for a typical dual-fuel household which pays by direct debit. But it is presented as a cap on the typical overall annual energy charges.

A spokesperson for the Department for Energy Security and Net Zero said the forecast remained "highly speculative".

"Using wholesale price fluctuations to predict what will happen in the next few months is not reliable," he said.

Political pressure is building on the government to provide support for households if bills rise sharply in July.

However there is a debate over whether that help should be universal, distributed to all households, or targeted at vulnerable and low-income houses. A targeted approach would allow more money to be given to households in need and would cost less, at a time when government spending is stretched.

Chancellor Rachel Reeves told the Times last week that help would be targeted to protect poorer households. The Treasury was drawing up "different options", she told the paper.

In 2022 following Russia's invasion of Ukraine the Government provided a package of support that applied to every bill payer and was not dependent on income or vulnerability. The package cost more than £35bn.

In November's Budget the government took action to reduce energy bills by £150 by removing some additional charges. Without that reduction, Cornwall's latest forecast would have pushed a typical household annual bill above £2,000.