British household energy bills are forecast to jump by £276 a year from January, with the government's price cap set to climb 16% to £1,999 for a typical dual-fuel home. Cornwall Insight, the consultancy behind the forecast, had previously estimated a 9% rise — the revised figure reflects gas prices that have surged to three-year highs on European markets. The mechanism is straightforward and largely external. The US-Israel war on Iran has disrupted oil and gas exports from the Gulf, with threats to tankers passing through the Strait of Hormuz and Bab al-Mandab choking global supply. European gas stores sit at their lowest level in 13 years, depleted by a cold end to last winter and extra gas-fired power generation during summer heatwaves. Buyers delayed restocking, and the market has now repriced the risk. Before the January increase even lands, households face a 4% rise from Thursday as the current quarterly cap — set by Ofgem — climbs to its highest level in three years. Electricity will cost 26.32p per kilowatt hour, gas 7.97p, for an equivalent annual bill of £1,723. The January figure would push that to £1,999 — the biggest quarterly leap since January 2023, when the aftermath of Russia's full-scale invasion of Ukraine was still reverberating through energy markets. Craig Lowrey of Cornwall Insight frames the timing bluntly: January is already the hardest month for household budgets, with cold weather and post-Christmas financial strain. Layering the steepest price cap increase in four years on top of that is a direct hit to disposable income for millions of families. The structural picture is familiar and damaging. Great Britain remains overwhelmingly exposed to global gas markets, with no domestic buffer sufficient to absorb supply shocks of this magnitude. Storage was already inadequate before this crisis — the Rough storage facility's closure in 2017 removed the country's only large-scale gas reserve, and nothing comparable has replaced it. Every geopolitical disruption passes through to household bills with minimal attenuation. The price cap itself functions as a cost pass-through mechanism, not a price shield. Ofgem adjusts it quarterly to reflect wholesale market conditions, meaning consumers absorb the full volatility of global energy markets on a three-month lag. The cap protects suppliers' margins, not household budgets. When wholesale prices spike, the cap spikes. When they fall, the cap falls — eventually. The pattern is one Britain has now lived through twice in three years: external shock, wholesale price surge, cap adjustment, household pain, political scramble. The question is whether this cycle produces any structural change — more storage, faster renewable deployment, demand reduction — or simply repeats until the next disruption arrives.
