Ahead of April’s Default Tariff Cap (price cap) fall, Cornwall Insight has released new forecasts for the July 2026 cap. Forecasts for July now sit at £1,929 per year for a typical dual‑fuel household1. While predictions have dipped slightly in the past few days - £44 since 19 March - the forecast still represents a rise of £288 or 18% percent on the April 2026 level of £1,641.
The slight reduction in the forecast follows a partial steadying in wholesale markets after a pause in energy infrastructure strikes and signals of a potential ceasefire in the Middle East conflict. Wholesale gas prices surged after the Middle East conflict disrupted tankers moving through the Strait of Hormuz, a major route for global Liquified Natural Gas (LNG), and damaged key oil and gas facilities in the Gulf. Markets are still feeling the impacts of the conflict and remain highly volatile.
With the observation window - the period of time Ofgem use to calculate the wholesale element of the cap – now at its midpoint, the wholesale price rises seen over the course of March will already be locked into the cap. Unless wholesale prices fall below pre-conflict levels - which looks unlikely given the scale of disruption and the uncertain repair timeline to key infrastructure in the region – a higher price cap in July is effectively unavoidable. The size of the increase depends on the duration of the conflict. It is worth noting that current wholesale costs remain well below the extremes of 2022, which means that, despite the turbulence, the scale of this crisis is not yet comparable to the price shock households faced three years ago.
Should high gas, power and oil prices continue, the effects will go beyond household bills. Inflationary pressure and rising project costs could start to weigh on investment decisions and slow the pace of new infrastructure, although the full extent of these knock-on effects will take time to become clear.
Figure 1: Cornwall Insight’s Default Tariff Cap forecast (dual fuel, direct debit customer)
| QUARTERLY | July - September 2026 TDCV forecast | Standing charge (£/per day) | Per Unit Cost (p/kWh) |
| Electricity (2,700 kWh) | £941.62 | 0.59 | 26.97 |
| Gas (11,500 kWh) | £987.46 | 0.30 | 7.62 |
| TOTAL | £1,929.08 |
Source: Cornwall Insight's Default Tariff Cap Service
Note: All figures are national average unless otherwise stated. All intermediate and final calculations are rounded to two decimal places. Totals may not add due to rounding.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight:
"Over a month into the Middle East conflict, energy markets are experiencing the kind of volatility not seen since 2022. While prices may have calmed a little over the past week, prior to the conflict, our forecasts pointed to a relatively stable price cap through the summer, now we are forecasting rises of 18%.
“With Ofgem’s price cap announcement just weeks away, infrastructure damage and continued disruption to marine traffic through the Strait of Hormuz are limiting the potential for any meaningful wholesale price fall. As a result, some of the increase is already effectively baked in. A rise in July is pretty much unavoidable, but how high prices go remains to be seen,
“There is some relief in the timing, summer is when energy demand is at its lowest, which should soften the impact on household expenditure on energy. If higher wholesale prices continue, it will be the effects on the October cap that have the most impact, and that is when the question of government support for households is likely to be revisited.
“We know however that short term relief is not a sustainable solution to higher energy bills - particularly given that this is the second such crisis in five years. There are no shortcuts to long-term energy price stability. The fundamental solution lies in reducing dependence on the gas wholesale market, and that transition demands both investment and time.”
Reference:
1. Ofgem’s Typical Domestic Consumption Values (TDCVs), are set at 2,700 kWh per annum for electricity, and 11,500 kWh per annum for gas.
Notes to Editors
For more information, please contact: Verity Sinclair at v.sinclair@cornwall-insight.com
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Cornwall Insight is a leading provider of research, analysis, consulting and training to businesses and stakeholders engaged in the Great British and Irish energy markets. To support our customers, we leverage a powerful combination of analytical capability, a detailed appreciation of regulation codes and policy frameworks, and a practical understanding of how markets function.
