Energy prices to ‘remain high’ as Brits brace for £221 rise | Personal Finance | Finance

An expert is warning that the pause in fighting between the US and Iran will not lead to a quick drop in energy prices. Simon Francis, coordinator of the End Fuel Poverty Coalition, made the comments ahead of the new Ofgem energy price cap kicking in tomorrow (July 1).

The July 1-September 30 price cap, which is the maximum amount your supplier can charge for a unit of energy and standing charge together, will be £1,862 per year. That is a 13 per cent rise in the previous price cap of £1,641, with the US-Israeli strikes on Iran and subsequent closure of the Strait of Hormuz, plus strikes on various Gulf states, thought to be behind the rise.

And while the signing of a memorandum of understanding in June has more or less ended hostilities for the time being, hard-pressed Brits should not expect much relief in their energy bills any time soon.

Cornwall Insight, a respected energy data analysis company, has predicted just a 0.5 per cent drop in the October price cap compared to July.

What does Cornwall Insight predict?

“Our forecasts have eased slightly since May, with the US-Iran 60-day ceasefire, along with ongoing negotiations, helping to stabilise wholesale gas markets. However, conflicting reports on the reopening of the Strait of Hormuz, the patchy progress of peace talks, and uncertain repair timelines to key regional infrastructure mean prices remain high, if less volatile than in the Spring,” a spokesperson said.

Speaking about Cornwall Insight’s prediction, Mr Francis stressed that the only way the UK could achieve cheaper bills was a mixture of renewable energy and more efficient homes.

He said: “Cornwall Insight’s forecast of a small fall in October offers little comfort. It is also entirely predicated on a fragile ceasefire with households remaining exposed to the volatility of fossil fuel prices, while the energy industry continues to profit.

“The price shock profiteers will try to tell you the answer is new North Sea licences. It is not: around 90 per cent of commercially viable North Sea gas has already been extracted, and what remains is sold at global market prices. The only credible path off the gas price rollercoaster is homegrown renewables, better energy efficiency for buildings and accessible heat pumps for every household, a reality with little recognition in Andy Burnham’s speech in Manchester yesterday.

“The Government cannot wait until September to act, and the next Prime Minister inherits that same urgency. If it is to be Andy Burnham’s vision of a rewired Britain, then the new PM must also rewire how energy bills are set, with a permanent social tariff, an end to energy debt and a credible plan to bring down electricity prices.”

What about later in the year?

In a further blow, Cornwall Insight warned that even January’s price cap is forecast to be higher than before hostilities started in the Middle East.

“Our forecasts have eased slightly since May, with the US-Iran 60-day ceasefire, along with ongoing negotiations, helping to stabilise wholesale gas markets. However, conflicting reports on the reopening of the Strait of Hormuz, the patchy progress of peace talks, and uncertain repair timelines to key regional infrastructure mean prices remain high, if less volatile than in the Spring,” a spokesperson said.

“For a current typical household, our forecast for October sits at £1,849 per year. Ofgem is updating its definition of a typical consumer from July to reflect falling household energy use, which adjusts the headline figure to £1,654 under the new values. On a like-for-like basis, that represents little change from July 2026.

“The observation window is now at its midpoint. Elevated wholesale prices seen in May and parts of June will already be locked in, which means prices are unlikely to fall to the levels seen in the first three months of the year. The scale of any increase will depend on how long the geopolitical uncertainty continues.

“While July’s higher prices will be cushioned by warmer weather and lower household energy use, the October cap lands as people switch their heating back on and will have a greater impact on household finances.

“The government has several options available to support households during this time, and the new Prime Minister may be open to introducing targeted support for more vulnerable households if prices remain high. Looking further ahead, we are currently forecasting a slight drop in the cap from January, but predictions remain above the bills seen during the first three months of the year.”