Ukraine crisis could see energy price cap rise by £400 for UK households

3 March 2022, 15:25

energy cap russia
Ukraine crisis could see energy price cap rise by £400 for UK households . Picture: Alamy

By Liam Gould

The energy price cap could rise by £400 after Russia launched its invasion of Ukraine, analysts at a leading consultancy have warned.

Cornwall Insight believe the price cap might hit £2,900 for the average household in October.

The prediction comes directly after Russia's president Vladimir Putin launched an invasion of Ukraine on Wednesday last week.

Cornwall senior consultant Dr Craig Lowrey said: "Following the catastrophic events in the Ukraine and the subsequent supply concerns across Europe, wholesale prices have been extremely volatile.

"On Friday we saw our energy price predictions fall by over £200, only for them to rocket to the record levels we see today."

Russia has been hit with a range of economic sanctions in response to the attack.

The market has come under further strain because of the conflict, as Russia is a major supplier of gas to Europe. This has directly led to an increase in wholesale gas prices.

The UK price of natural gas for next-day delivery surged by as much as 73% at the onset of the invasion.

Read More: Cost of living crisis: How will the energy price cap rise affect you?

Footage shows moment of explosion in Kyiv

Emma Pinchbeck, chief executive of Energy UK, said households might have to pay between £2,500 and £3,000 per year for their supplies in October.

This would see energy prices more than doubling from the current cap, which is set at £1,277 per year.

The predictions come as Britain faces a cost of living crisis - with millions of people already facing a hike in their household finances.

The energy price cap is already scheduled to rise to £1,971 from the beginning of April, as well as increases to National Insurance and rising inflation.

The cost of living crisis has currently seen inflation hit a three-decade high of 5.5% and prompted the Bank of England to forecast that it will top 7%.

The original energy cap rise was due to rising prices in Europe at the end of 2021 that have yet to resolve. The main reason behind the rise was fall-out from the coronavirus pandemic.

The current conflict is estimated to only further increase energy prices, with an updated October price cap set to be announced in the summer.

Russian assets will have a 'slow impact' as Russian money 'everywhere'

Read More: “Surge pricing” on energy bills could hit millions of households

But many regulators say the estimates are dependent on an early and small data range that is continually changing.

Regulator Ofgem has said early predictions on the energy price cap rise are not definitive. They cite the estimates made six months ago as being wildly different to the cap that was later announced.

Dr Lowrey similarly said the uncertainty of the political situation makes it difficult to know just how much households will be affected by the price rises.

"With the response of countries and companies to the actions of Russia changing almost hourly, there is no doubt these peaks and troughs are set to continue at least in the short term," he said.

"The UK Government will need to be ready with ways to mitigate the impact on consumers, with an increase in financial support to households likely to be a necessity, in addition to renewed considerations on support to business customers."

More Latest News

See more More Latest News

The Brits' family came together to pay tribute

Family of Scottish man found dead in Portugal's 'faith in humanity restored' as balloons released at emotional vigil

Artist's impression of the new national biosecurity centre at Weybridge, Surrey

New centre to tackle 'risk of future pandemics' gets billion-pound investment

Screenings for cervical cancer save at least 2,000 lives each year in the UK

NHS to offer at-home cervical cancer screening test kits that 'could save 5,000 lives per year'

Zelensky visits 10 Downing Street for talks with Keir Starmer on Monday

Zelensky warns Putin could launch an attack on NATO 'within five years'

Tom Cruise and Brad Pitt arriving at the F1 The Movie premiere in Leicester Square.

'Interview with the Vampire' co-stars Brad Pitt and Tom Cruise make 'surprise' public reunion after 24 years

The first Brits are arriving in the UK after being evacuated from Israel.

First Brits rescued from Israel touch down at Heathrow Airport as more to arrive in coming days

The president of the Royal College of Psychiatrists (RCPsych) said professionals are in distress

Stretched mental health services leaving psychiatrists ‘in emotional and ethical distress’

Jobs will be created at warehouses in locations including Hull and Northampton

Amazon’s new UK warehouses to hire thousands as Starmer hails ‘win’ for Britain

Iran has launched an attack on a US military base.

Trump claims Israel and Iran have agreed 'complete and total ceasefire' as Tehran warns there is 'no agreement' on peace

A Qatar Airways flight from Manchester was forced to divert earlier this evening

UK flight bound for Doha forced to turn back after Iran launches missiles at US air base in Qatar

Sir Keir Starmer will fly to the Hague today for crunch meetings against a backdrop of global volatility in the Middle East and Ukraine.

UK and NATO allies to include 'money spent on tackling small boats' to boost defence spending in bid to appease Trump

The

Thousands raised after family die in motorway crash - daughter, 8, is only survivor

Kate Shemirani, conspiracy theorist, anti-vaxxer and former nurse

Daughter of notorious conspiracy theorist died of cancer after 'falling for mother's theories', her brothers say

Emma Raducanu during a practice session during Eastbourne Open, where she is currently competing

Raducanu says Wimbledon 'did amazing job' after stalker tried to buy match tickets

Large fire engulfs the abandoned Hotspur Press mill building near Oxford Road in Central Manchester. Credit Milo Chandler/Alamy Live News

Major fire in Manchester city centre causes serious disruption

Notorious criminal John 'Goldfinger' Palmer was murdered at his home in Brentwood in Essex in 2015. His killer has never been found

Who killed John 'Goldfinger' Palmer? Police make fresh appeal 10 years after his death