UK Energy Price Cap Set at £1,837 from July – British Gas Customers Face Higher Bills

UK households are facing another shift in energy costs, with the price cap expected to be set at £1,837 from July. For millions of customers, including those with British Gas, the change points to higher bills after a short period of easing earlier this year.

The latest forecast, based on modelling by Cornwall Insight, suggests an annual increase of around £196 for a typical dual-fuel household. While this is lower than earlier predictions of a much steeper rise, it still signals that energy costs remain firmly elevated.

The adjustment comes at a time when global energy markets are being shaped by geopolitical tensions, particularly ongoing conflict in the Middle East. Disruption to supply routes and infrastructure has kept prices volatile, even as recent weeks have brought some temporary relief.

Price cap set to change from July

The energy price cap, reviewed quarterly by Ofgem, determines the maximum rate suppliers can charge households on standard variable tariffs. The regulator is due to confirm the official level for July to September on May 27.

If current forecasts hold, the cap will move from £1,641 to £1,837 — an increase of roughly 13%. Earlier in March, analysts had warned of a possible jump to £1,973, which would have meant a far sharper hit to household finances.

Although the latest outlook is less severe, it still represents a noticeable rise for British Gas customers and others who remain on default tariffs. Monthly direct debits are expected to increase, adding pressure to household budgets already stretched by inflation.

It is important to note that the cap does not limit total bills, but rather the price per unit of energy. This means actual costs will vary depending on usage, particularly during colder months.

Global tensions driving market uncertainty

The main factor behind the expected increase is the ongoing instability in global energy markets. More than six weeks of conflict in the Middle East have disrupted key supply routes, particularly through the Strait of Hormuz — a critical channel for around a fifth of the world’s oil and seaborne gas.

At the height of the disruption, crude oil prices surged to around $120 per barrel, while gas prices also climbed sharply. These increases fed directly into wholesale energy markets, which in turn influence the UK price cap.

Energy infrastructure across the region has also faced disruption, further tightening supply and adding to uncertainty. Analysts warn that until shipping routes stabilise and production recovers, prices are unlikely to return to pre-conflict levels.

For a detailed explanation of how the cap works and what affects it, households can visit the Ofgem guidance page.

Why the increase is smaller than feared

Despite the ongoing crisis, recent movements in the market have softened the outlook slightly. UK gas prices, which had surged to around 180p per therm in March, have since fallen to roughly 104p. European prices have followed a similar trend.

This drop has been driven in part by weaker demand from Asia, particularly China. Instead of competing for limited gas supplies, some regions have turned to alternative energy sources such as coal, freeing up liquefied natural gas shipments for Europe.

At the same time, global producers have increased output to take advantage of earlier price spikes, helping to stabilise supply. Analysts have described this as a “clear supply response” that has eased pressure on the market.

As a result, the expected increase in UK energy bills has been revised down from earlier worst-case scenarios. While still higher, the outlook is far less severe than many households had feared just weeks ago.

‘Calm before the storm’ warning

Even with the recent drop in wholesale prices, experts are warning that the situation remains fragile. Some analysts believe the current stability could prove temporary, describing it as a potential “calm before the storm”.

There are concerns that energy prices could climb again later in the year, particularly if Europe struggles to rebuild gas storage levels over the summer. Ongoing disruption in major exporting countries, including Qatar, adds another layer of risk.

Qatar alone accounts for a significant share of global liquefied natural gas supply, and any long-term production issues could tighten markets further. At the same time, continued geopolitical uncertainty means traders remain cautious.

Economists have also pointed out that energy shocks tend to feed into wider inflation, affecting everything from transport to food prices. This could have broader implications for household finances beyond just energy bills.

For British Gas customers, the immediate impact will be higher monthly costs from July, unless they are on fixed tariffs. Many households are now weighing whether to lock in deals or remain on variable rates as the market evolves.

While fixed tariffs can offer protection from sudden changes, they also carry the risk of missing out if prices fall again. With uncertainty still high, the decision is becoming increasingly difficult.

For now, the expected £1,837 cap highlights a simple reality: although the worst-case scenario may have been avoided, energy costs in the UK are still significantly above pre-crisis levels, and the path ahead remains uncertain.

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