The extremely brief period of falling energy bills is already over.
Ofgem confirmed this morning that the energy price cap will rise by 13% from 1 July 2026, adding £221 to the typical annual dual-fuel bill and pushing it to £1,862. For the average household, that is roughly £18 more every month, arriving in the middle of summer, when bills are supposed to be at their lowest.
The official cause is rising wholesale gas prices. The real cause is a geopolitical catastrophe that was set in motion with apparently no serious consideration of the consequences for ordinary households on the other side of the world.
On 28 February 2026, Israel and the United States launched a campaign of military strikes against Iran. The stated aim was regime change and the targeting of Iran’s nuclear programme. What followed was entirely predictable to anyone who had looked at a map. Iran closed the Strait of Hormuz, a major global trade route through which around 20% of the world’s petroleum and 20% of its liquefied natural gas passes every year. Pre-conflict, around 3,000 vessels used the strait each month. That figure has collapsed to around 5% of that level.
UK wholesale natural gas prices rose by roughly 75% between late February and 23 March 2026. Wholesale prices are now 28% higher than they were three months ago. That number has been mechanically fed into today’s cap calculation, and there it sits… baked in for three months regardless of whether markets partially recover.
For UK homeowners, the bitterness of this moment is hard to overstate. Many will have watched energy bills fall in April and allowed themselves a cautious sense of relief. Some will have cancelled fixed deals. Some will have deprioritised the decision to invest in solar, a heat pump or a battery. The quarterly cap mechanism (which Ofgem cannot easily change) means that even a partial easing of the conflict will not translate to lower bills until at least October. The damage done between late February and mid-May is already locked in.
There is one number in today’s announcement that deserves more attention than it will probably receive. Electricity prices are rising by around 5% while gas prices are rising by 24%. Ofgem attributes this directly to growing renewable generation on the grid reducing reliance on gas for electricity production. For the first time in a meaningful way, the electricity-gas price gap is being driven partly by the UK’s own clean energy investment rather than solely by market forces. This matters enormously for the long-term economics of heat pumps.
The running cost argument for low-carbon heating has always been sensitive to the electricity-to-gas price ratio. When electricity is three or four times the price of gas per unit (as it has been for much of the past decade) heat pumps need to deliver strong efficiency figures just to break even on bills. As renewable generation pushes electricity price rises below those of gas, that ratio begins to shift. Slowly, unevenly and with no guarantee of linear progress, but today’s figures are pointing in the right direction for heat pump households, even as the overall direction of bills is pointing the wrong way entirely.
The structural problem remains unchanged and should be stated plainly: Britain’s exposure to events in the Persian Gulf is not an act of God. It is the result of decades of policy failure, underinvestment in domestic energy production and a grid reform programme that has moved too slowly. Prices remain lower than at the height of the energy crisis in 2022, but that comparison is doing a lot of heavy lifting when households are facing their fourth significant price movement in eighteen months.
A quick note on the headline figure: Ofgem is simultaneously updating its Typical Domestic Consumption Values to reflect the fact that average household energy use has fallen significantly. Under those revised figures, the headline cap is reported as £1,663. The unit rates are higher. What you pay still depends on how much energy you use, and the revised “typical household” is now defined as using considerably less than before. Do not mistake a smaller headline number for a smaller bill!
The next cap announcement is 26 August, covering October to December. By then, we will know whether the ceasefire holds and whether wholesale prices ease. The cap methodology means that even if they do, the relief will be partial. The case for taking your energy future into your own hands (through solar, battery storage and low-carbon heating) has never been made more forcefully than by a quarterly OFGEM announcement that arrives this morning.
