Ofgem Set to Lift UK Price Cap 13% to £1,850 as Grid Costs Threaten Lasting Pain
Updated
Updated · The Guardian · May 26
Ofgem Set to Lift UK Price Cap 13% to £1,850 as Grid Costs Threaten Lasting Pain
9 articles · Updated · The Guardian · May 26
£1,850 is the level analysts expect Ofgem to set for a typical annual household bill on Wednesday, up £209 from the previous quarter after wholesale prices jumped following the Strait of Hormuz disruption.
Only about one-third of electricity bills now comes from wholesale power, leaving network charges, carbon costs, subsidies and other non-commodity items to drive prices even if gas eases.
Neso projects Network Use of System charges rising to £12.1 billion in 2029-30 from £7.6 billion this year, while balancing costs could climb from about £2 billion to as much as £8 billion by 2030.
Suppliers, the Climate Change Committee and Oxford's Dieter Helm all warn cheaper power is unlikely soon, with more meaningful bill relief pushed into the 2030s as older renewable subsidies expire.
The report argues Ofgem should publish medium-term bill forecasts, saying quarter-by-quarter caps obscure the longer-run cost of decarbonisation for households, heat-pump adoption and UK industrial competitiveness.
With the UK's gas storage critically low, what is the plan to shield households from future global energy shocks?
As war drives energy bills toward £2,000, is accelerating the green transition the only path to lasting energy security?
UK Energy Price Cap to Jump in July 2026: How Geopolitical Turmoil Will Hit Households and What Comes Next
Overview
From July 1, 2026, UK households will face a significant increase in energy bills as the energy price cap rises, with typical annual dual-fuel bills expected to jump by over £200. This surge is mainly driven by a sharp escalation in wholesale energy prices during February and March 2026, which resulted from geopolitical instability, including US and Israeli missile strikes on Iran and subsequent retaliatory actions. These events damaged critical Gulf energy infrastructure and led to the temporary closure of the Strait of Hormuz, a key global energy route. As a result, energy prices have remained elevated, putting extra pressure on household budgets.