Households in Britain could face a £276 increase in their typical annual energy bill from January, according to Cornwall Insight forecasts reported by BBC Business. The consultancy expects a 16% rise to £1,999, which would be the largest increase in four years and would arrive during the coldest part of the year.
The projection follows a smaller increase taking effect on 1 October under Ofgem’s price cap. Around 20 million households across England, Scotland and Wales have variable tariffs covered by the cap, which limits gas and electricity unit prices. October’s 4% rise takes the annualised bill for a typical dual-fuel household paying by direct debit to £1,723. A government VAT reduction has limited that increase, saving a typical household roughly £45 a year.
Cornwall Insight attributed the expected January jump to gas supply disruption caused by the Middle East conflict and depleted European gas reserves. Replenishing storage could keep bills elevated beyond winter, the consultancy warned. Its principal consultant, Craig Lowrey, said households would face the increase when cold weather and stretched post-Christmas finances already put budgets under pressure.
The January figure remains a forecast: Ofgem will announce the cap in late November. An easing of Middle East tensions could reduce the impact, although the period used to calculate January’s prices is already halfway complete. BBC Business reported that suppliers had produced similar forecasts, while Lowrey regarded an increase as almost inevitable.
EDF Energy chief executive Simone Rossi urged ministers to extend the reduction in electricity VAT from 5% to zero beyond its scheduled April expiry. Warning of another major energy crisis, he also called for approval of the Jackdaw gas field off Aberdeen and Rosebank oil field off Shetland. Prime Minister Andy Burnham told the BBC that ministers were considering measures to ease pressure on household finances.
The expected rise comes alongside mounting energy debt. Ofgem figures cited by BBC Business show customers owe suppliers more than £5bn in unpaid bills and charges. National Energy Action chief executive Adam Scorer called for targeted winter support, action on debt and improvements to the least energy-efficient homes.