Households have been warned they could face an annual energy bill of thousands of pounds this winter.
Gas and electricity bills could reach £3,616 in the new year, experts say – hundreds of pounds more than previous predictions.
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Households have been warned they could face an annual energy bill of more than £3,600 this winterCredit: Getty
In May, the government announced a package of support for energy costs, worth £400 per household, in response to predictions that bills would rise to £2,800 for the average household in October.
But experts at Cornwall Insight have said bills are now likely to rise to £3,358 from October and £3,616 from January.
Households will find out how much prices will rise on August 26 when Ofgem announces the new energy price cap.
The change will take effect from October 1.
The regulator has not yet decided on the exact change in the price cap.
The cap limits the price per unit that energy suppliers can charge and means the typical dual fuel bill is currently £1,971, although you can pay more or less depending on usage.
Ofgem has proposed to review the price cap more often than twice a year to smooth out increases over a longer period.
After October we could see the next increase in January 2023 instead of April.
The estimates are based on the wholesale cost of energy which has soared in recent months due to global supply problems and the war in Ukraine.
Cornwall Insight principal consultant Craig Lowrey said rising gas prices and concerns about Russian supply had caused the rise.
He added: “While the increase in forecasts for October and January is an urgent concern, it is not just the level, but the duration, of the increases that make these new forecasts so devastating.
“Given the current wholesale price level, this level of household energy bills currently shows little sign of abating until 2024.”
Millions of households across the country will receive a £400 discount on their energy bills from October.
It is up to the energy companies to administer and distribute the discount directly to their customers.
On Friday, Richard Neudegg, director of regulation at Uswitch, called for the £400 to be increased to a minimum of £600 and for payments to vulnerable households to rise from £650 to £950.
“The Government did the right thing by stepping in with broad support to try and help ease the blow.
“However, this support now appears to be a severe underestimation of what consumers need,” he said.
“Households need clarity to help them plan for the most expensive winter in living memory.”
Charity National Energy Action predicted last month that if the average bill were to reach £3,250 a year, 8.2 million UK households would be in energy poverty, or one in three.
What can you do to avoid price increases?
Unfortunately, not much can be done to prevent rising energy prices.
With the cost of living skyrocketing and inflation expected to hit 15% by the end of the year, we’ve all had our purse strings, and everyone will be affected.
However, there are always schemes and funds available to keep your hand during price hikes.
For example, there are many energy grants and schemes open to help if you’re struggling, such as British Gas’s hardship fund, which can lend you up to £1,500 in free cash towards bills.
There is also a one-off fuel voucher from your energy supplier if you have a prepaid meter.
Contact your provider directly to see what they offer, what the eligibility requirements are and how much you can get.
If you don’t know who your supplier is, you can find out here.
In terms of council funds, the Home Support Fund has been expanded to help families with the rising cost of living.
This help could include cash grants to pay bills or cover food costs; help will depend on where you live.
For example, residents in Blackpool can get up to £300, depending on their circumstances.
To find out what support is available in your area, contact your local council.
If you’re a pensioner, there are also additional grants available if you’re concerned: those with pension credit should be eligible for the £650 cost of living payment.
All pensioners should also receive an extra payment of £300 in November or December to help pay bills and essentials.