The price cap will rise from July, the fourth increase in two years, as the Iran war drives wholesale gas prices higher. Households are set to learn the exact figure in late June, when Ofgem announces the new quarterly cap. LBC first reported the news, noting the conflict’s impact on global energy markets. The Diss Mercury and Kent Online also carried the story, amplifying the regional concern.
What the hike means for your bills
Ofgem’s price cap currently stands at £1,738 for a typical dual-fuel household paying by direct debit. The July rise is expected to add roughly £80-£120 annually, based on wholesale gas futures trading 15% higher since the Iran conflict escalated. That works out at about £7-£10 extra per month. But the number is uncertain, the cap formula includes network costs, which may also rise as suppliers hedge against volatility. The exact figure will be confirmed in late June, with the new cap taking effect from 1 July.
Who qualifies, and who doesn’t
Every household on a standard variable tariff is affected. About 28 million homes in Great Britain fall into this category. Those on fixed deals are shielded until their contract ends, but few fixed deals offer rates below the current cap. The catch is that the price cap is a maximum unit rate, not a total bill cap. So households that use more energy, larger homes, older properties with poor insulation, will see a bigger absolute increase. A typical 3-bed semi using 12,000 kWh of gas and 3,000 kWh of electricity could see its annual bill rise to around £1,850, depending on the final cap.
Grants and schemes to offset the rise
The government’s Boiler Upgrade Scheme (BUS) offers £7,500 towards a heat pump installation, which can cut heating bills by 20-30% compared to a gas boiler. The Energy Company Obligation (ECO4) scheme provides free or subsidised insulation for low-income households and those on certain benefits. The Home Upgrade Grant (HUG2) covers off-gas grid homes in England. For landlords, the Minimum Energy Efficiency Standards (MEES) require an EPC rating of E or above, from 2028, this will rise to C. Improving your EPC from D to C could reduce energy bills by up to £300 a year, according to government estimates. But these grants have limited funding and strict eligibility criteria. Officials have not confirmed when applications open for the next round of HUG2.
What it costs a typical 3-bed semi
Consider a 3-bed semi in Kent, built in the 1970s, with cavity wall insulation but no loft insulation upgrade. Its EPC rating is D. The July hike adds about £90 to its annual gas and electricity bill. Over a year, that’s £1,830 total. If the owner installs loft insulation (cost: £300-£500, payback in 2-3 years) and upgrades to a heat pump (cost after BUS grant: £2,500-£4,500), the annual bill could fall to £1,400. That’s a saving of £430 per year, more than offsetting the hike. But the upfront cost is a barrier, even with grants, a heat pump installation requires a significant investment. Glazing is standard-rated for VAT at 20%. The zero rate for energy-saving materials covers insulation, heat pumps and solar panels; HMRC names secondary and double glazing as excluded (VAT Notice 708/6).
Next steps for homeowners
Check your EPC rating on gov.uk. If it’s below C, prioritise insulation, loft, cavity wall, and solid wall if applicable. Apply for ECO4 if you’re on benefits or have a low income. For heat pumps, contact an MCS-certified installer and ask about the Boiler Upgrade Scheme. The application window for BUS is open now, but funding is first-come, first-served. If you’re on a standard variable tariff, consider fixing your energy deal before July, but compare rates carefully, as some fixes are above the current cap. Finally, monitor Ofgem’s announcement in late June. The rise is coming, but with the right upgrades, you can cut your long-term costs.
Frequently Asked Questions
The energy bills hike will take effect from July 2026, with Ofgem announcing the new price cap in late June. The rise is driven by the Iran war's impact on wholesale gas prices.
For a typical 3-bed semi using 12,000 kWh of gas and 3,000 kWh of electricity, the hike could add £80-£120 per year, or about £7-£10 per month. The exact amount depends on the final cap and your energy usage.
Key grants include the Boiler Upgrade Scheme (£7,500 for heat pumps), ECO4 (free insulation for low-income households), and HUG2 (for off-gas grid homes). Check eligibility on gov.uk and apply early, as funding is limited.
