The average household’s energy bill might hit around £500 in January alone, experts have said as they released another gloomy forecast for consumers across the country.
BFY Group, a utilities consultancy, said it expects the cap on bills to hit £3,850 between January and April next year – hundreds of pounds more than prior predictions.
The latest forecast comes after the Kremlin further strangled the flow of gas to Europe.
While the UK gets very little of its gas directly from Russia, the price paid here is determined by what happens across the Continent.
“Following further rises in wholesale prices as flows of gas from Russia to Europe via the Nord Stream 1 pipeline drop to 20% of capacity, we now forecast the Ofgem price cap to rise to £3,420 in the fourth quarter of 2022 and £3,850 in the first quarter of 2023,” Dr Gemma Berwick, a senior consultant at BFY Group said.
“This will make the average household bill over £500 for January alone.”
If the predictions come to pass they will put enormous pressure on already squeezed households.
It would be a near-doubling of today’s record price cap which at £1,971 is already hundreds of pounds more than the previous high.
Cornwall Insight, another consultancy, had predicted a £3,364 January price cap just three weeks ago but circumstances have changed significantly since then.
BFY now believes Ofgem will have to set the earlier October price cap change at £3,420, with another increase expected when the cap is reviewed in January.
— Ofgem (@ofgem) July 27, 2022
The cap used to be updated twice a year, but recent changes mean that there will be a new price cap every three months going forward. It is based on the average cost of energy in the previous months.
Although it is still early days for the January prediction, analysts already have most of the data they need to accurately forecast October’s rise.
The worsening forecasts, and fears that the market is still rising, will put further pressure on the Government to support the most vulnerable households through the energy crisis.
Ministers were forced to act in May by announcing a major package of support for households.
But at that point the prediction for October’s price cap was just £2,800 – more than £600 lower than the latest forecast.