Households could face a 9 per cent rise in energy bills this winter as price cap to jump to £1,714
The next energy price cap review is set to take place August 23
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Cornwall Insight, the energy consultancy has predicted the typical household’s energy bill to rise to £1,714 a year, up from £1,568 currently on October 1.
This is less than its previous prediction in June, when it estimated that the cap would rise by 9.9 per cent to £1,723.
The average household energy bill is instead set to rise by nine per cent in October when the latest change to the price cap takes effect, the experts explained.
They said a further “modest rise” is likely in January although a bigger increase is possible depending on the progress of the war between Russia and Ukraine.
Craig Lowrey, principal consultant at Cornwall Insight, said: "This is not the news households want to hear when moving into the colder months.
“Following two consecutive falls in the cap, I’m sure many hoped we were on a steady path back to pre-crisis prices.
The average household energy bill is instead set to rise by nine per cent in October
PA“However, the lingering impact of the energy crisis has left us with a market that’s still highly volatile and quick to react to any bad news on the supply front.
“Despite this, while we don’t expect a return to the extreme prices of recent years, it’s unlikely that bills will return to what was once considered normal.
“Without significant intervention, this may well be the new normal.”
The news follows the announcement by the Government, that they are changing the eligibility criteria for Winter Fuel Payments.
Only those on certain benefits such as Pension Credit are now eligible. Chancellor Rachel Reeves has estimated the move will save the Treasury around £1.4billion a year - however campaigners have argued this move will push millions into poverty.
Simon Francis, coordinator of the End Fuel Poverty Coalition said: “It’s another difficult week on the cards for households who will learn just how bad energy bills will be this winter.
“The reality is that bills will go up compared to today and will be around 65 per cent higher than they were before the energy bills crisis started.
“But instead of offering help, the Government has axed winter fuel payments to millions and refuses to confirm if the Household Support Fund will be extended.
“Not only do we need to see urgent movement on both these issues, but we need to see action to reduce energy debt and changes in the rules to reset Britain’s broken energy system so it is on the side of consumers.
“We back the Government’s ambition to bring down bills in the long term through more renewables and a Warm Homes Plan, but it also needs to look at shorter term measures too.”
Ofgem changes the price cap every three months based on several factors, the most important of which is the price of energy on wholesale markets.
Ofgem is currently considering the future of price protection, including the suitability of the price cap and a potential permanent ban on so-called acquisition tariffs – cheaper prices for new customers to lure them away from their existing supplier.
Cornwall Insight is calling for a reform of the price cap or introduction of social tariffs, but warned longer-term solutions were also vital.
Lowrey concluded: “Immediate action is needed to ease the financial burden on households – such as the introduction of social tariffs, or reform of the price cap – but that’s only part of the solution.
“We must also develop a long-term strategy to secure our energy future. This means a fundamental overhaul of our energy system, with a strong emphasis on increasing domestic energy production.
“Simply waiting for prices to drop on their own isn’t an option, we need a proactive and forward-thinking approach to ensure long lasting energy affordability and security.”