Experts have warned that energy bills in Britain could reach more than £3,600 a year this winter, with rising wholesale prices expected to continue pushing up household costs until 2024 at least.
Research firm Cornwall Insight predicts the energy price cap is on track to rise to £3,615 a year from January, up from its previous estimate of £3,363 made last month.
The cap, which is set quarterly by energy industry regulator Ofgem, was £1,400 a year as recently as October last year.
“What we’re seeing is how much uncertainty there is about the availability of gas from Russia to the European Union as winter approaches,” said Craig Lowery, principal consultant at Cornwall Insight, speaking on the show BBC Radio 4’s Today on Tuesday.
“Frankly, it hasn’t been unusual to see our forecasts change by up to £100 a day as a result of this. We’ve really seen over the course of the spring and summer this progressive upward trend in our forecasts. But crucially, what we’re seeing is that the level of increase in these forecasts continues well into 2023, and at this point we don’t see any sign of it tapering off into 2024.”
Cornwall expects average annual household energy bills to top £3,700 in the second quarter of next year, before falling back slightly to £3,470 in the final three months of the year.
The latest forecast of rising energy bills came as energy firm BP reported a record profit of $8.45bn (£6.9bn) in the quarter to the end of June, triple the $2.8 billion from the same period last year and the company’s second highest. history
Consumers are increasingly struggling with the cost of living crisis – inflation is at a 40-year high – and the UK government’s plans to ease rising energy bills are not enough, they say the deputies last week. The government’s multibillion-dollar support package includes a £400 discount for every household in the country in October and a £150 discount on council tax bills for some homes. Other measures include a £650 payment to more than 8 million low-income households.
Lowery said Cornwall Insight’s forecasts for increases in the energy cap had increased by more than £500 since the Government’s funding package was announced.
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“We have the £400 payment, which will affect the increase we’re forecasting, but it won’t make up for that,” he said. “We are not ruling out the possibility, if not the need, of additional government support while these high energy bills continue. This is a very long-term problem for households that will need concerted and sustained government action to help manage -ho”.
Last month, BFY, a management consultancy, predicted that a typical energy bill could reach £3,850 a year in January.
“While no government can control global gas prices, we are offering £37 billion of help to households, including £400 off energy bills and £1,200 of direct support for households vulnerable to help with the cost of living,” said a spokesman for the Department for Business, Energy and Industrial Strategy.