London (Parliament Politics Magazine) – Energy bills across the UK could increase by 9% from October to an average of £1,714 a year for the standard household’s gas and electricity, according to projections.
What Are the Implications of the Projected 9% Rise in Energy Bills?
Reviewers at Cornwall Insight, a well-respected energy consultancy, have indicated that the government’s energy price cap will increase for the average dual-fuel energy bill, up from its present level of £1,568. The energy regulator, Ofgem, is hoping to set out the next price cap for October until the end of December by Friday.
How Will the Expected Increase in the Energy Price Cap Affect Households?
If the analysts’ predictions are accurate, the price cap would be £121 more inferior than energy costs last winter when the lid was set at £1,835 a year for gas and electricity after a peak in global energy costs because of Russia’s war in Ukraine. However, winter energy bills will remain well beyond the levels paid before Russia’s invasion began a global energy market shock when the price cap was placed at £1,216 for the winter of 2020-21.
Campaigners have also cautioned that higher bills this winter will take a tremendous toll on households, which have constructed up debts to their suppliers after years of increasing prices. Energy debt has surpassed a record high of over £3bn, according to official figures.
What Are the Predictions for Energy Debt This Winter?
Craig Lowrey, a principal consultant at Cornwall Insight, stated: “This is not the news households want to listen to when moving into the colder months. Following two consecutive declines in the cap, I’m sure many hoped we were on a steady path back to pre-crisis prices. However, the lingering effect of the energy crisis has left us with a market that’s still highly explosive and quick to react to any bad news on the supply front.
“Despite this, while we don’t anticipate a return to the extreme prices of recent years, it’s unlikely that bills will return to what was once thought normal. Without significant intervention, this may well be the new normal.”
The expected growth in energy bills comes after the chancellor, Rachel Reeves, reported last month that the winter fuel allowance would no extended be universal and only pensioners on means-tested advantages would qualify for it this winter.
The allowance, which cost between £100 and £300, was spent on 11.4 million pensioners in 8.4 million households in the winter of 2022 to 2023. The changes are anticipated to leave hundreds of thousands of pensioners encountering significantly higher energy prices over the colder months, according to fuel poverty campaigners at National Energy Action (NEA).
Adam Scorer, the chief executive of NEA, stated: “If these alarming estimates are approved by Ofgem on Friday, energy bills and energy debt will hurt household finances beyond breaking point. “Households will go into winter with less approval and higher prices. This can still be avoided if the UK government and Ofgem work urgently to directly reduce customer debt levels and energy prices for those most in need.”