Energy bills set to rise to staggering £4,200 this winter as Brits grapple with cost of living crisis
9 August 2022, 12:52
Households have been warned energy bills are expected to rise to £4,200 this winter as wholesale prices surge again.
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In a new dire outlook for households, Cornwall Insight said bills are expected to soar to around £3,582 in October, from £1,971 today, before rising even further in the new year.
Previously, bills were estimated to rise to £3,358 from October and £3,616 from January.
In May, the Government announced an energy costs support package – worth £400 per household – in response to predictions that bills would rise to £2,800 for the average household in October.
But experts at Cornwall Insight have forecasted that bills are now likely to rise to £4,200 from January as wholesale prices surge again.
Ofgem is set to put the price cap at £4,266 for the average household in the three months from the beginning of January.
Read more: Brits to face energy bill rises every three months as Ofgem changes price cap updates
The energy consultancy said that this was around £650 more than its previous forecast.
It comes as Ofgem last week announced changes to how it will calculate the price cap on energy bills going forward - with squeezed Brits now facing price hikes four times a year - up from just two.
Ofgem said it will now be updated quarterly instead of every six months.
It claimed the change will help with stability in the energy market and reduce the risk of more suppliers going bust, which would lead to higher costs for customers.
Craig Lowrey, principal consultant at Cornwall Insight, said its January predictions will only "compound" the concerns faced by thousands of Brits.
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"While our price cap forecasts have been steadily rising since the summer 2022 cap was set in April, an increase of over £650 in the January predictions comes as a fresh shock," Mr Lowrey said.
"The cost-of-living crisis was already top of the news agenda as more and more people face fuel poverty - this will only compound the concerns.
"Many may consider the changes made by Ofgem to the hedging formula, which have contributed to the predicted increase in bills, to be unwise at a time when so many people are already struggling."
However, he also defended Ofgem's decision, which will hopefully lead to lower bills in the second half of next year.
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"With many energy suppliers under financial pressure, and some currently making a loss, maintaining the current timeframe for suppliers to recover their hedging costs could risk a repeat of the sizable exodus seen in 2021," Mr Lowrey said.
"Given that the costs of supplier failure are ultimately met by consumers through their energy bills, a change which means that this is less likely is welcome, even if the timing of it may well not be."
The Government is giving out a £400 rebate on bills from October - starting with £66 a month for the first two months, rising to £67 a month from between December and March.
The support will be paid out to some 29 million households.
The news of soaring energy bills comes as the Bank of England issued a stark warning that Britain is heading for a "long recession".
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The bank hiked interest rates by 0.5% to 1.75% last Thursday - the highest level since January 2009.
In a chilling forecast, experts at the bank are predicting five consecutive quarters of recession.
Inflation levels have been pushed up for several reasons, particularly as a result the fallout from the Covid pandemic as well as Russia's invasion of Ukraine putting pressure on gas supplies.
They are expected to reach 13% by the end of 2022.
