Household Energy Bills Set to Soar: Biggest Rise in Four Years
British Broadcasting Corporation (BBC)
18 minutes ago
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Kevin Peachey, Cost of living correspondent
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Household energy prices are poised for a significant increase in January, with typical annual bills projected to jump by £276, according to figures obtained by the BBC. This 16% rise would be the highest in four years and comes at a crucial time as millions of households face higher costs during the coldest months.
The forecast from consultancy Cornwall Insight precedes a price adjustment under regulator Ofgem's October price cap, set to take effect tomorrow. It intensifies the pressure on the government to provide relief for struggling families.
Simone Rossi, CEO of supplier EDF, has further warned about an impending "second energy crisis" in the UK and called for an extension of the VAT cut on electricity, which begins Thursday.
Impact on Households:
Approximately 20 million homes across England, Scotland, and Wales are on variable energy tariffs governed by Ofgem's price cap. These households will experience a 4% increase in prices on Thursday, amounting to about £60 per year or £5 per month. This brings the annual bill for a typical household using both electricity and gas to £1,723 for direct debit payments.
Without the government's VAT cut, these bills would be even higher. However, Cornwall Insight forecasts an even more substantial jump in January, predicting a typical annual bill of £1,999.
Challenges Ahead:
"These prices are going to hit households hard," said Craig Lowrey, principal consultant at Cornwall Insight. "January is already a difficult month for many, with cold weather and bank balances still recovering from Christmas."
The projected increase reflects disruptions in gas supplies due to the conflict in the Middle East, leading to low gas storage levels in Europe. This could result in sustained high bills beyond the winter season, according to the forecaster.
Cornwall Insight is renowned for its accurate forecasts and is widely respected within the industry and political circles. Similar predictions have been made by energy suppliers.
Note: This prediction is subject to change, as Ofgem will announce the actual January price adjustment in late November. While a de-escalation of tensions in the Middle East could mitigate the impact on billpayers, the price-setting period for the January cap is already halfway through.