Energy bills are set to surge to as high as nearly £2,200 each year on average from January as the Iran war continues to drive up gas prices.

A new report from EDF and seen by The Times forecasts the 27 per cent rise, which would see Ofgem’s price cap rise from £1,723 a year now to a record high of £2,192 a year in January.

It comes as fresh attacks between the US and Iran over recent weeks has pushed gas prices to a new four-year high as fears grow over dwindling European supplies as the continent heads towards winter. Wholesale gas prices hit €97 (£81) a megawatt-hour on Monday amid falling temperatures and rising demand for heating across Europe.

The price households pay for each unit of gas is expected to hit a record high of 11.13p/kWh in January, according to the EDF analysis. The previous record was 10.33p/kWh at the start of 2023, which was triggered by Russia’s invasion of Ukraine.

Reports the US and Israel have drafted plans to ramp up attacks on Iran following the midterm elections have also triggered a spike in gas prices.

Ofgem, the independent energy regulator, updates its price cap every three months as it assesses the state of the market. The price cap limits what gas and electricity suppliers can charge customers based off costs they are facing. Gas and electricity prices are expected to rise again in April.

A spokesman for EDF told The Times: “Rising wholesale gas prices are once again pushing up energy bills and the increases forecast this winter are worsening. Additional support for those least able to pay, alongside tackling the growing problem of energy debt, is essential for this winter.

“Longer term, with 70 per cent of the UK’s total energy consumption still coming from oil and gas, we need to electrify the economy more quickly to improve resilience to future shocks and ensure we utilise the homegrown electricity being built.”

Chancellor John Healey will deliver his Budget on Wednesday amid growing concern over how Britons will cope with soaring energy bills and stay warm this winter.

Read More: Energy bills could hit nearly £2,200 a year as Iran war drives up gas prices