Households warned energy bills set for biggest rise in four years (Image: Getty)
Energy bills are forecast to soar by as much as 16% in January, delivering a new cost-of-living blow. The increase, predicted by the consultancy Cornwall Insight, would hit millions of households on standard variable tariffs and mark the biggest rise in bills in four years.
The 16% increase would see Ofgem’s energy price cap reach £1,999 a year for a typical dual-fuel household in January 2027, up £276. Craig Lowrey, principal consultant at Cornwall Insight, said the forecasted rise will come at the worst time of year. He said: “These prices are going to hit households hard. January is already a difficult month for many, with cold weather and bank balances still recovering from Christmas.”
The news comes just a day before energy prices increase, as the Ofgem Energy Price Cap rises by 4%. This will push the average annual household energy bill up from £1,663 to £1,723 for a typical dual-fuel home paying by Direct Debit.
Simeone Rossi, the boss of EDF, has warned that the nation is now “walking into a second energy crisis”. He has called for an extension to the VAT cut on electricity, which also starts on Thursday (October 1).
The rise in energy bills is a direct result of the war in the Middle East, which has severely disrupted international gas and oil supplies. This has driven global wholesale energy costs to their highest levels in over three years as utility companies are forced to pay more for fuel.
Cornwall Insight now expects the impacts to be felt “well beyond the winter” as rebuilding low gas storage stocks across Europe could take some time. Lowrey warned that another rise to the energy cap in January was “all but certain”.
Brits have been warned of a second energy crisis. (Image: Getty)
Speaking at the Labour Party Conference, Andy Burnham addressed the upcoming increase to the energy price cap. He offered immediate relief and proposed overhauls to the energy market.
He said: “We’re looking at any measure that can give people breathing space, that can take the pressure off.” This includes removing VAT from energy bills, which is expected to save the average household around £45 a year.
He is also planning the Great British Grid, a publicly owned body, which could help lower bills in the long-term. The project aims to accelerate grid connections and reduce costs within the next decade, according to the Labour Party.
Richard Neudegg, director of regulation at Uswitch.com, said: “Household energy prices look set to go from worse to even worse this winter.
“This latest prediction would represent the highest rate of increase since the energy crisis and will be extremely hard to bear for many households at the coldest time of year.
Andy Burnham addressed upcoming energy price cap increases. (Image: Getty)
“It is too early to call the exact level of the January price cap, given the continued instability in the Middle East, but the direction of travel is very concerning, alongside other cost-of-living pressures households face.
“Switching energy tariff to a well-priced fixed deal is the biggest lever households on the price cap can pull to bring their costs down right now. The cheapest deal on the market is currently £355 less than this predicted January price cap based on typical use, with some deals also cheaper than October’s rates.
“While getting off the standard variable tariff means you can avoid these big increases to come with bills already significantly higher than last year, it may not be enough, so keeping a close eye on energy usage will be crucial.
“This winter will be tougher than last, so households should take action now. For those worried or concerned about paying their bills, it’s important not to suffer in silence.”
Energy regulator Ofgem reviews the price cap every three months. It does not cap household bills; it caps unit rates for gas and electricity. Household bills depend on how much energy is used.
