Energy bills across Great Britain could rise by 9% this winter to an average of £1,714 a year for the typical household’s gas and electricity, according to forecasts.
Analysts at Cornwall Insight, a well-respected energy consultancy, have forecast that the government’s energy price cap will rise for the average dual-fuel energy bill from October, up from its current level of £1,568.
The energy regulator, Ofgem, is expected to set out the next price cap for October until the end of December by Friday 23 August.
If the analyst’s predictions are correct, the price cap would be £121 lower than energy costs last winter when the cap was set at £1,835 a year for gas and electricity after a rise in global energy prices because of Russia’s war in Ukraine.
However, winter energy bills will remain well above the levels paid before Russia’s invasion triggered a global energy market shock, when the price cap was set at £1,216 for the winter of 2020-2021.
Campaigners have also warned that higher bills this winter will take a greater toll on households, which have built up debts to their supplier after years of rising prices. Energy debt has reached a record high of over £3bn, according to official figures.
Craig Lowrey, a principal consultant at Cornwall Insight, said: “This is not the news households want to hear when moving into the colder months. Following two consecutive falls in the cap, I’m sure many hoped we were on a steady path back to pre-crisis prices. However, the lingering impact of the energy crisis, has left us with a market that’s still highly volatile and quick to react to any bad news on the supply front.
“Despite this, while we don’t expect a return to the extreme prices of recent years, it’s unlikely that bills will return to what was once considered normal. Without significant intervention, this may well be the new normal.”
The expected increase in energy bills comes after the chancellor, Rachel Reeves, announced last month that the winter fuel allowance would no longer be universal and only pensioners on means-tested benefits would qualify for it this winter.
The allowance, worth between £100 and £300, was paid to 11.4 million pensioners in 8.4 million households in the winter of 2022 to 2023. The changes are expected to leave hundreds of thousands of pensioners facing significantly higher energy costs over the colder months, according to fuel poverty campaigners at National Energy Action (NEA).
Adam Scorer, the chief executive of NEA, said: “If these alarming estimates are confirmed by Ofgem on Friday, energy bills and energy debt will stretch household finances beyond breaking point.
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“Households will go into winter with less support and higher prices. This can still be avoided if the UK government and Ofgem act urgently to directly reduce customer debt levels and energy prices for those most in need.”
NEA, and other consumer groups, have called on the industry regulator to scrap energy standing charges, which are daily fees charged to households whether they use any energy or not. This year the average standing charge for dual-fuel customers paying by direct debit climbed to 83% higher than it was in April 2019, according to NEA.
The record high rates disproportionately affect households who use less energy, according to campaigners, particularly those households that use prepayment meters, which would need to pay off any outstanding charges or go without gas or electricity until they are cleared.