Great Britain energy cap rises 13% as Iran conflict drives wholesale costs
The average household bill increases by £18 per month from July, with Ofgem warning that autumn and winter prices remain contingent on geopolitical de-escalation and market recovery.
The energy price cap in Great Britain is set to increase by 13% from July, raising the average annual gas and electricity bill to £1,862 until the end of September. This adjustment, driven by soaring global energy prices linked to the war in Iran, adds approximately £18 per month to typical household costs. The rise marks the steepest summer increase in charges in four years, reflecting the significant impact of the Middle East conflict on wholesale market rates.
Under the new cap, households paying via direct debit will see electricity charges rise from 24.67p per kilowatt hour to 26.11p, while gas charges will increase from 5.74p to 7.33p. The total annual figure of £1,862 represents a £221 increase from the April to June period, when the average bill stood at £1,641. While this level is lower than the 2022 peak of £4,279, it is the highest recorded since the first quarter of 2024, when the cap reached £1,924.
Energy Secretary Ed Miliband described the increase as deeply unwelcome, attributing the spike to a conflict the government did not choose. He called for de-escalation in the Middle East to lower prices and urged accelerated investment in clean, homegrown power as a means to avoid future volatility. Miliband stated that the government’s drive for domestic energy independence is essential to bringing bills down permanently and shielding consumers from external geopolitical shocks.
Ofgem, the industry regulator, determined the new cap based on wholesale market costs and standing charges. Tim Jarvis, Ofgem’s interim chief executive, told BBC Radio 4 that the rise was almost entirely driven by global gas prices resulting from the Middle East conflict. He noted that the regulator had updated its typical consumption values to reflect lower energy usage during the past two milder winters, likely due to cost-of-living pressures and more efficient appliances, though the overall calculation methodology remained unchanged.
The war in Iran has caused a severe supply shock, with European gas prices more than doubling from pre-crisis levels and tripling compared to pre-Ukraine invasion levels. Jarvis warned that the next quarterly review in October would depend heavily on the speed of a peace deal and the reopening of the Strait of Hormuz. He indicated that the disruption to markets is likely to be more long-term than initially hoped, with elevated prices expected to persist through the autumn and winter.
Unpaid energy bills reached a record £4.5bn earlier in 2026, partly sustained by a £52 annual charge included in the price cap. Jarvis advised households to consider fixing their energy bills to protect against potential further rises, noting that while the situation is uncertain, the risk of missing out on savings if prices fall must be weighed against the security of a fixed rate.