The price cap will rise by £63 in October, the third increase this year. But the End Fuel Poverty Coalition now says that rise would have been a freeze had it not been for the Iran conflict.
As reported by the End Fuel Poverty Coalition, the calculation strips out the effect of Middle Eastern tensions on wholesale gas prices. Without that, the cap would have held flat at July’s level.
Who pays for the Iran premium
Ofgem sets the cap based on a formula that includes wholesale energy costs. Those costs have jumped since late August as shipping routes through the Strait of Hormuz, through which 20% of global LNG passes, faced disruption risk. The premium is about £63 per typical dual-fuel household per year, the Coalition estimates.
That is £63 that will land on the bills of every household on a standard variable tariff. For a 3-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity, it adds roughly £5.25 a month. Small enough to ignore individually; large enough to push another 150,000 households into fuel poverty, according to the Coalition’s modelling.
But the catch is this: the premium is temporary. Geopolitical risk ebbs and flows. The underlying cost of gas in the UK has actually fallen 12% year-on-year. What households are paying for is insurance against a conflict that may never disrupt supply.
What this misses, and what homeowners can do
The real story is not the £63. It is that the cap has risen three times in a year, each time blamed on external events, Ukraine, now Iran. The structure of UK energy pricing remains hostage to global gas markets. Households have no control over that. They do have control over how much gas they use.
Energy Saving Trust figures show that a typical semi-detached home can save £200–£400 a year by topping up loft insulation to 270 mm, draught-proofing, and upgrading to an A-rated gas boiler or heat pump. Solar panels can cut electricity bills by 40–60%, depending on orientation. The Boiler Upgrade Scheme offers £7,500 off a heat pump installation.
These measures are not affected by the Iran premium. They work the same whether the cap rises or falls. And they improve EPC ratings, a C or above adds 5–10% to property value, according to Nationwide.
Who qualifies, and who doesn’t
The End Fuel Poverty Coalition’s analysis is aimed at policymakers, not individual households. But the message for homeowners is clear: the cap is a political calculation, not a physics one. The physics of your home, its insulation, its heating system, its glazing, is the only thing you can fix.
Grants are available. The Great British Insulation Scheme offers free or subsidised cavity wall and loft insulation for low-income households. The Home Upgrade Grant (HUG) covers heat pumps and solar for off-gas-grid homes in England. Scotland’s Warmer Homes Scotland programme provides similar support.
Households on standard variable tariffs can apply through gov.uk from 4 November. Eligibility closes on 31 March 2027 for some schemes. The £63 rise is a nudge: act now, before the next geopolitical shock adds another £63.
Frequently Asked Questions
Ofgem announces the cap quarterly. The January figure depends on wholesale prices in November and December. If the Iran situation stabilises, the cap could fall. If it escalates, expect another rise. Homeowners should not bet on either outcome.
Yes. The Warm Home Discount provides £150 to low-income households on electricity bills. The Energy Company Obligation (ECO4) funds full insulation and heating upgrades for eligible homes. Check eligibility at gov.uk.
