The July energy price cap is now forecast to hit £1,800, the highest level since January 2024. Cornwall Insight, the consultancy whose forecasts the industry watches, released the revised figure this week, blaming rising wholesale gas costs triggered by conflict in the Middle East. For a typical UK household on a standard variable tariff, that is £63 more than the current cap of £1,737. The cap was already 9% above pre-crisis levels.
As reported by Cornwall Insight, the price cap is set quarterly by Ofgem based on wholesale energy prices from the preceding months. The latest forecast reflects a 12% rise in gas prices since January, driven by fears of supply disruption in the Strait of Hormuz. The catch is that the cap mechanism was built to protect consumers from price spikes, but it lags by three months, meaning households feel the pain long after the wholesale surge.
Who pays, and how much more
Ofgem’s cap applies to 28 million households on default or standard variable tariffs. For a typical 3-bed semi using 12,000 kWh of gas and 2,900 kWh of electricity a year, the £1,800 cap translates to £150 a month, up from £145 now. The increase hits hardest in winter, when consumption doubles. Prepayment meter customers, who often have less flexibility to switch, will see similar rises, though their cap is set slightly lower by Ofgem to reflect lower standing charges.
But the forecast is not a done deal. Cornwall Insight notes that if Middle East tensions ease, the cap could fall back to £1,720. If they escalate further, it could breach £1,900. The range is unusually wide. This reflects geopolitical uncertainty that no econometric model can tame.
What this means for your EPC and home upgrades
Higher bills sharpen the arithmetic on home efficiency. Every £1 saved on energy is £1 that does not leak out of the household budget. The Energy Saving Trust estimates that loft insulation (top-up from 100mm to 270mm) saves £35 a year; cavity wall insulation saves £195; a heat pump can save £300–£600 a year versus an old gas boiler, depending on the house. At the new £1,800 cap, a 20% reduction in consumption, achievable with a package of insulation and a heat pump, saves £360 a year.
The government’s Boiler Upgrade Scheme offers £7,500 towards a heat pump, but the pot is finite and applications are running at 3,000 a month. The Great British Insulation Scheme, relaunched in 2023, provides free or subsidised insulation for lower-income households. Both schemes have eligibility criteria based on EPC rating and income. Anecdotally, installers in the South East report lead times of 8–12 weeks for heat pump installations, so acting now means the system could be running before next winter.
The politics of the price cap, and what the government could do
The price cap was introduced in 2019 as a consumer protection measure. It has become a political lightning rod. Labour, now in government, has not announced a change to the cap mechanism, though it has pledged to reduce household bills by 20% by 2030 through renewable expansion. The problem is that renewable generation takes years to build, while the cap moves quarterly. In the short term, the Treasury could cut VAT on energy bills (currently 5%) or expand the Warm Home Discount to more households. Neither has been confirmed.
What this misses is the structural issue: the UK’s housing stock is among the least efficient in Europe, with an average EPC rating of D. Every price spike is a tax on that inefficiency. The cheapest unit of energy is the one you do not use, but the upfront cost of insulation and heat pumps remains a barrier for millions. Grants help, but they are not universal.
What to do now
Households on standard variable tariffs should check their current tariff and compare it with fixed deals. Some fixed tariffs are now priced below the forecast cap, Octopus Energy offers a 12-month fix at £1,720, £80 below the July forecast. Switching takes 15 minutes and can lock in savings before the cap rises. For those considering upgrades, book an EPC assessment (£60–£120) and apply for the Boiler Upgrade Scheme through a certified installer. Applications close when the funding runs out, and it typically does by late autumn.
Frequently Asked Questions
Not definitely, it is Cornwall Insight's forecast based on current wholesale prices. Ofgem will announce the actual cap in May, and it could be lower if gas prices fall. But the trend is upward, and households should plan for higher bills.
Yes. Some suppliers offer fixed tariffs below the forecast cap. Check comparison sites like Uswitch or MoneySavingExpert. Fixed deals typically lock the rate for 12 months, but may have exit fees if you switch early.
