Energy bills in Great Britain could reach more than £3,600 a year this winter, experts have warned, with soaring wholesale prices expected to continue to push up household costs until at least 2024.
The research firm Cornwall Insight predicts the energy price cap is on track to rise to £3,615 a year from January, an increase on its previous estimate of £3,363 made last month.
The cap, which is set quarterly by the energy industry regulator, Ofgem, was at £1,400 a year as recently as October last year.
“What we are seeing is the extent to which there is so much uncertainty regarding the ongoing availability of gas from Russia to the European Union as winter approaches,” said Craig Lowery, a principal consultant at Cornwall Insight, speaking on BBC Radio 4’s Today programme on Tuesday.
“Frankly it has not been uncommon to see our forecasts change by as much as £100 a day as a consequence of this. We really have seen throughout spring and summer this progressive trend upwards in our forecasts. But crucially what we are seeing is the level of increases in these forecasts is continuing well into 2023 and at this point we don’t see any sign of it easing off going into 2024.”
Cornwall is forecasting that average annual household energy bills will top £3,700 in the second quarter next year, before falling back slightly to £3,470 in the final three months of the year.
The latest forecast of soaring energy bills came as energy firm BP reported bumper profits of $8.45bn (£6.9bn) in the quarter to the end of June, triple the $2.8bn in the same period last year and the second-highest in the company’s history.
Consumers are increasingly struggling with the cost of living crisis – inflation is running at a 40-year high – and the UK government’s plans to alleviate the rising cost of energy bills are not enough, MPs said last week. The government’s multibillion-pound package of support includes a £400 discount for every household in the country in October, and a £150 rebate from council tax bills for some homes. Other measures include a £650 payment to more than 8m low-income households.
Lowery said that Cornwall Insight’s forecasts of increases in the energy cap had risen more than £500 since the government’s funding package was announced.
“We have the £400 payment, that will make a dent in the increase we are forecasting but it is not going to offset this,” he said. “We are not ruling out the possibility, if not the need, for additional support from government for as long as these high energy bills continue. This is very much a long-term problem for households that is going to need concerted and enduring action by the government to help manage that.”
Last month, BFY, a management consultancy, predicted a typical energy bill could reach £3,850 a year by January.
“While no government can control global gas prices, we are providing £37bn of help for households including the £400 discount on energy bills, and £1,200 of direct support for the most vulnerable households to help with the cost of living,” said a spokesperson for the Department for Business, Energy and Industrial Strategy.