UK energy bills forecast to top £4,200 from January
Energy bills are expected to rise even further this winter than previously forecast, according to the latest from Cornwall Insight.
The energy consultancy said bills will reach approximately £3,582 per year for the average household from October. It then forecast bills at £4,266 from January, and £4,427 from April.
The cap will then start falling, hitting £3,810 in the three months from July and £3,781 from October next year.
Craig Lowrey, principal consultant at Cornwall Insight, described the increase of more than £650 in the January prediction as a "fresh shock".
“While our price cap forecasts have been steadily rising since the summer 2022 cap was set in April, an increase of over £650 in the January predictions comes as a fresh shock,” he said.
“The cost of living crisis was already top of the news agenda as more and more people face fuel poverty – this will only compound the concerns.
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“Many may consider the changes made by Ofgem to the hedging formula, which have contributed to the predicted increase in bills, to be unwise at a time when so many people are already struggling.”
Lowrey said that the government must take action to step in and protect households from the runaway costs.
The government has already promised £400 to every household, and extra help for the more vulnerable.
“If the £400 was not enough to make a dent in the impact of our previous forecast, it most certainly is not enough now,” Lowrey said.
He said that the current price cap is not controlling consumer prices and damaging suppliers’ business models, and asked if it was fit for purpose.
“The government must make introducing more support over the first two quarters of 2023 a number one priority.
Consumer expert Martin Lewis has described the latest energy price cap forecasts as "tragic", saying they will leave many households "destitute".
These amounts are unaffordable for millions. The Jan figure equates to 45% of the full new state pension, and a higher proportion of the old one.
The rise alone on the Jan prediction, from when the help was first announced in May, is roughly £1,400/yr...
— Martin Lewis (@MartinSLewis) August 9, 2022
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“In the longer-term, a social tariff or other support mechanism to target support at the most vulnerable in society are options that we at Cornwall Insight have proposed previously.
Cornwall insight said it had increased its forecast due to the continuing rise in wholesale prices and an expected change in methodology for how the energy price cap is calculated.
“Right now, the current price cap is not working for consumers, suppliers, or the economy.”
He said the change in how the price cap is calculated was necessary to prevent suppliers going bust, but added: "Rather than critiquing the methodology of the cap, it may be time to consider the cap's place altogether.
The cap, which is set quarterly by the energy industry regulator, Ofgem, was at £1,400 a year as recently as October last year.
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