Warning winter energy bills to rise by more than expected

By Noor Nanji
Business reporter, BBC News

smart reader in foreground, woman out of focus at desk in backgroundImage source, Getty Images
Image caption,
The price cap is expected to go up again in October

Typical domestic energy bills could hit more than £3,600 a year this winter, according to a new forecast.

Consultancy Cornwall Insight said the typical gas and electricity bill in England, Wales and Scotland could reach £3,615 in the new year - hundreds of pounds more than previous predictions.

The government has announced a package of measures to help households with the rising cost of living.

However, some have called for more support for families.

The average energy bill was £1,400 a year in October 2021. The last energy price cap increase, in April 2022, saw that rise to around £2,000.

The price cap - the maximum amount suppliers can charge customers for average energy usage in England, Scotland and Wales - is expected to go up again in October.

Cornwall Insight told BBC Breakfast that the typical domestic customer was likely to pay £3,358 a year from October, then £3,615 a year from January.

'Little sign of abating'

Dr Craig Lowrey, principal consultant at Cornwall Insight, said rising wholesale gas prices and concerns over Russian supply were behind the big leap, and warned the government help announced "will only scratch the surface of this problem."

"However, while the rise in forecasts for October and January is a pressing concern, it is not only the level - but the duration - of the rises that makes these new forecasts so devastating," he said.

"Given the current level of the wholesale price, this level of household energy bills currently shows little sign of abating into 2024.

In May, energy regulator Ofgem said the typical household should expect to see an £800 increase in October, to £2,800 a year.

Last month, BFY, a management consultancy, predicted a typical energy bill could hit £3,850 a year by January.

The energy price cap sets a limit on the amount that can be paid for each unit of energy.

It is based on the price energy suppliers pay producers for electricity and gas.

This has risen sharply, fuelled by the war in Ukraine which has threatened supplies from Russia.

Many families are already facing soaring costs, with UK inflation - the rate at which prices are rising - at the highest in 40 years.

Last week, personal finance expert Martin Lewis said people would be "panicking" over their energy bills, and warned it would "be desperate" when bills rise this winter.

"It's going to throw many households into a terribly difficult financial situation," he told the BBC.

Mr Lewis said that more needed to be done now to help the poorest households.

£400 bill help

A spokesperson from the Department for Business, Energy and Industrial Strategy said: "While no government can control global gas prices, we are providing £37bn of help for households including the £400 discount on energy bills, and £1,200 of direct support for the most vulnerable households to help with the cost of living."

Last week, the government announced how households in England, Scotland and Wales will receive that £400 to help with rising fuel bills this autumn with the money paid in six instalments.

Image source, Getty Images

The energy bill discount is part of a wider package of measures to tackle soaring prices.

Other measures include a £650 payment to more than eight million low-income households.

The first instalment of payments to those on benefits started being made from 14 July.