Cost of living crisis: UK energy bills ‘could hit more than £3,300 a year this winter’
Energy bills could hit more than £3,300 a year next winter in the latest blow to households already strained by increased food and fuel prices amid the deepening cost-of-living crisis.
Cornwall Insight said the price cap for the average household could go up in January by £360 more than previously thought, as wholesale prices continue to surge. Its experts said bills could rise from today’s record £1,971 to £3,245 in October, and then further to £3,364 at the start of next year.
Want a quick and expert briefing on the biggest news stories? Listen to our latest podcasts to find out What You Need To Know
The latest research marks a steep rise from Cornwall’s previous predictions, as international gas prices remain stubbornly high. In its previous forecast, on June 22, the energy consultancy predicted bills rising to £2,981 in October, and £3,003 in January. The forecasts are based on what an average household will spend on gas and electricity in a year. A household that buys more energy will see higher bills, and vice versa.
A set of government payments to help with bills starts to be paid next week, but there are increasingly vocal calls for ministers to intervene more strongly to support those struggling.
Founder of Money Saving Expert Martin Lewis described the forecasts as "horrendous", saying he believes them to be close to what the figures will actually end up being after assessments are made.
"Please share - people need to know what's coming to see if they can prepare for it," he wrote on Twitter.
"It is Ofgem who sets the price cap (which is now really a price floor) based on wholesale prices and the requirement to hedge to have forward supply.
"The big profits aren't being made by retail energy suppliers, but by oil and gas producers."
In April, energy bills rose 54% for the average household. Before he left office, former chancellor Rishi Sunak announced a £15 billion package to help with the rising cost of living. It promised up to £1,200 for the most vulnerable households.
But the price cap was at £1,277 last winter, so if Cornwall’s January predictions are correct, households will be left nearly £900 worse off than they were before the crisis, even with the maximum help from the government. The consultancy said the energy market has become increasingly volatile amid uncertainty over the gas that Russia sends to Europe, while recent strikes by Norwegian offshore workers have also driven up wholesale costs. Ultimately these prices will trickle down to consumers. “As it stands, energy consumers are facing the prospect of a very expensive winter,” Cornwall said.
When chancellor, Mr Sunak also decided to scrap the requirement to repay the £200 discount on energy bills over five years, which was effectively a loan.
This measure was announced back in February to help people with their soaring energy bills.
Mr Sunak also announced a one off payment of £650 to those on the lowest incomes paid in two instalments - in July and Autumn for everyone on means tested benefits.