Britain's energy price-cap forecast to rise about 11%, cornwall insight says

UK Energy Price Cap Set to Rise by 11% in July, Cornwall Insight Reports

Forecasted Increase and Contributing Factors

Impact of Global Events on Energy Prices

LONDON, March 13 (Reuters) - Britain's domestic energy price cap is forecast to rise by about 11% in July, analysts at Cornwall Insight said on Friday, increasing their forecast due to the ongoing impact of the Iran war on wholesale energy prices.

Government Response to Rising Costs

British finance minister Rachel Reeves said on Wednesday she would consider action to shield households from surging energy costs due to the conflict in the Middle East, but that it was premature at this stage.

Wholesale Gas Prices and Ofgem's Price Cap Formula

Wholesale gas prices have risen more than 60% over the past two weeks. Those prices are the largest single factor contributing to British energy regulator Ofgem's domestic price cap, which is set quarterly using a formula that also reflects suppliers' network costs and environmental and social levies.

Disruptions in the Middle East and LNG Exports

Disruptions to shipping in the Middle East and a halt to liquefied natural gas exports from Qatar, one of the world's largest gas exporters, has led to a surge in international gas prices which is showing no signs of abating.

Cornwall Insight's Updated Forecast

Projected Price Cap Figures

Cornwall Insight forecasts Ofgem's price cap will rise in July to 1,827 pounds ($2,422) a year for typical use, from 1,641 pounds in April.

Comparison to Previous Forecast

Last week they had forecast a rise of 10% in the cap.

Upcoming Announcement

Ofgem is expected to publish the next price cap level by May 27. 

($1 = 0.7545 pounds)

(Reporting by Susanna Twidale. Editing by Paul Simao and Mark Potter)