This week has seen the fourth anniversary of Russia’s invasion of Ukraine.
That’s four years of war and continuous suffering for the people of Ukraine.
The ramifications have been felt far and wide and it would appear crass to moan from these shores about higher energy bills since. The link, however, can not be dismissed and neither can the impact in the UK.
The war triggered unprecedented spikes in gas and electricity prices and millions have faced choices over heating and eating to this day, four years on.
We learned on Wednesday that the energy price cap – the variable tariff set by the regulator Ofgem – is to fall by £117, or 7%, over the three months from April to an average annual figure of £1,641.
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That level is £400 higher than the pre-war average. It tells us a few things when compared to the peak of £4,279 witnessed almost a year after Russia’s invasion.
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Yes, wholesale gas costs – which drove UK inflation above 11% in late 2022 – are down substantially but they remain volatile at a time when there are a host of other costs complicating the outlook for bills ahead.
Policy costs are a great example of these competing forces.
While the chancellor is taking £150 away from energy bills (including fixed rate deals) per year by removing green levies and some other costs, they are now being reflected in general taxation.
It’s important to note that the price of the race to net zero, including investment in new nuclear, being undertaken by the government remains a major component within household energy costs.
It’s also worth bearing in mind that families are footing a big bill for making the UK’s grids and networks fit for the renewables-led future.
Upgrades will add approximately £108 to typical annual household energy bills by 2031, according to Ofgem.
Read more:
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So, is the price cap on track to come down further?
No. Not according to the energy consultancy Cornwall Insight, anyway.
“While policy – and network – costs will continue to play a significant role in shaping household bills, wholesale [gas] markets have become increasingly volatile since the beginning of the year”, it noted.
“Unlike the April cap, which benefited from comparatively lower wholesale prices near the end of 2025, the July cap is being set against more turbulent market conditions”.
Those include markets pricing in the risk that another war will disrupt flows, particularly of crucial liquified natural gas (LNG), if the US attacks Iran.
Given that Europe has lost most of its Russian oil and gas, any threat to supplies through the Strait of Hormuz has the potential for history to repeat itself through a renewed energy-driven cost of living crisis.
It’s a risk our economy, still damaged by high prices, could well do without.
