Household energy prices are forecast to jump by £276 annually in January, marking a 16% increase and the largest rise in four years. This projection from consultancy Cornwall Insight comes ahead of Ofgem's October price cap adjustment, intensifying pressure on the government to provide financial support.
EDF CEO Simone Rossi warned the UK is "walking into a second energy crisis" and urged an extension of the VAT cut on electricity, which begins on Thursday.
Prime Minister Andy Burnham acknowledged the severe difficulty of rising energy, petrol, and diesel costs, stating that measures to alleviate pressure on households are being considered. He was speaking at the Labour conference in Liverpool.
Approximately 20 million households in England, Scotland, and Wales are on variable tariffs subject to Ofgem's price cap. These households will see a 4% price increase on Thursday, equating to about £60 annually, bringing the typical bill to £1,723. This rise would have been higher without the government's VAT cut, which saves about £45 per year.
Cornwall Insight's forecast suggests the typical annual bill could reach £1,999 in January. Craig Lowrey, a principal consultant at Cornwall Insight, noted that this increase will hit households hard during an already difficult month.
The projected rise is attributed to disruptions in gas supplies linked to the Middle East conflict and low European gas storage levels. Cornwall Insight, which has a strong forecasting record, believes high bills could persist beyond winter.
Ofgem will announce the actual January price change in late November. While a de-escalation in the Middle East could mitigate the impact, the pricing period for the January cap is already underway, making a significant increase for those not on fixed tariffs highly probable.
Aaron Richards from Maidenhead expressed concern over rising costs, stating, "I just feel like everything's going up. How far is it going to go? Someone's got to step in." He highlighted the struggle of people unable to afford heating and the fundamental need for accessible housing and food.
Recent Ofgem data indicates that customers collectively owe over £5 billion in unpaid energy bills. Fuel poverty charity National Energy Action is calling for government support for vulnerable households this winter, alongside measures to address energy debt and improve home energy efficiency.
EDF Energy CEO Simone Rossi told the BBC's Big Boss Interview podcast that the UK is facing a "second significant energy crisis." He recommended extending the VAT cut on electricity bills and approving new gas and oil field developments, such as Jackdaw and Rosebank.
The government has stated it will explore ways to support billpayers with the cost of living.
Additional reporting by Oliver Smith and Paul Seddon. Graphics by Miguel Roca-Terry.
