Cornwall Insight predicts that Britain's energy cap will rise by about 10%.

Analysts from Cornwall Insight said on Wednesday that the UK's energy price cap will rise by about 10% this July due to an increase in wholesale prices linked to a war in Iran. The rise in energy prices would not be welcome news for the Labour government of Prime Minister KeirStarmer, who is under pressure to keep its promise to reduce household energy costs. This would also wipe out any savings from the decision to scrap the policy which forces energy providers to pay for measures like insulation and new heating systems. The British energy regulator Ofgem sets the domestic price cap using a formula that takes into account wholesale energy prices as well as network costs, environmental and social charges, and other factors. International gas prices have risen due to disruptions in shipping to the Middle East, and the suspension of liquefied gas exports by Qatar, the largest gas exporter in the world. The gas prices in Britain have risen by more than 70% since last week.

This latest forecast "puts wholesale markets back into the spotlight and illustrates how exposed UK household remain to international market fluctuations," said Craig Lowrey. Principal consultant at Cornwall Insight.

Cornwall Insight predicts that Ofgem will raise its price cap in July from 1,641 pound ($2,409.20 per year) to 1,801 pound ($2,409.20 for typical usage).

Lowrey, Ofgem's director of corporate affairs and public affairs, said that the company is expected to announce a new price cap by May 27. However, she added that this forecast could change earlier if wholesale prices continue to fall or increase.

(source: Reuters)