Warning winter energy bills to rise by more than expected

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.

However, it subsequently admitted that “prices are looking higher than they did when we made that estimate”. 

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 news.

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

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.