Household energy bills in the United Kingdom are projected to rise sharply in early 2027, driven by escalating wholesale gas prices amid renewed tensions between the United States and Iran. According to forecasts from EDF Energy, one of Britain’s largest energy suppliers, the average annual domestic energy bill could increase by 27 percent to approximately £2,192 from January, with a further rise to around £2,389 anticipated in April.
The surge in prices is linked to disruptions in the supply of liquefied natural gas passing through the Strait of Hormuz, a key global shipping route. These disruptions have pushed wholesale gas prices to their highest level in four years. EDF's analysis indicates that the cost per unit of gas for consumers could reach a record 11.13 pence per kilowatt-hour (kWh) in January, exceeding the previous peak of 10.33 pence per kWh recorded in early 2023 amid the fallout from Russia’s invasion of Ukraine.
Electricity prices are also expected to approach record levels, with the unit cost forecasted to rise to 33.08 pence per kWh early next year, nearing the high of 34 pence per kWh seen in 2023. Ofgem, the UK’s energy regulator, adjusts the energy price cap quarterly based on supply cost assessments and is expected to raise the cap in line with these industry forecasts.
The increase in the April price cap will also reflect rising costs associated with balancing the power grid—a process that includes measures such as temporarily disconnecting wind farms to avoid system overloads—accounting for around £100 of the predicted bill hike.
E.On, another major energy supplier, has issued a similar forecast, estimating that the typical annual energy bill will rise to £2,183 in January. The company has called on the government to implement immediate, targeted assistance for households facing the greatest financial hardship.
The projected rise in energy costs adds urgency to government discussions on support measures, as unpaid energy debts have soared to approximately £5.5 billion. The latest forecast marks an increase of about £200 over Exeter-based consultancy Cornwall Insight’s estimate last month, reflecting a 25 percent jump in wholesale gas prices during October amid concerns over diminished European gas reserves.
EDF emphasized the need for enhanced support for vulnerable consumers during the winter months and highlighted the importance of accelerating the UK’s transition away from oil and gas, which currently account for 70 percent of the country’s energy consumption, to improve future resilience.
Energy Price Intelligence founder Tony Jordan noted that the approaching unit gas price would represent the highest households have ever faced. He pointed out that while Ofgem has revised down its estimate of typical household energy consumption since 2023—which can understate headline bill figures—using consistent usage data shows that bills this winter are likely to surpass those recorded last year. For context, the government provided a £400 discount on energy bills during the winter of 2022-23 to help alleviate the cost burden on consumers.