Energy bills could rise yet again from 1 January as rising wholesale costs push up prices for households.
Analysts at Cornwall Insight predict prices will rise 1 per cent, or about £19, to £1,736 a year for the typical home. The increase comes on top of a 10 per cent hike from October.
After October’s increase, analysts had estimated that prices would drop in the new year, but a few things have combined to push up prices. Energy prices have been kept high by tensions in Ukraine and the Middle East, plus rising wholesale gas prices.
This has combined with other factors including weather disruption and some energy plants being offline for maintenance.
Cornwall Insight said: “Given the price cap rise in October, many will have been hoping to see a fall in the cap for January. Unfortunately, forecasts show that prices will be staying relatively high for the remainder of winter.”
In the short term, these higher prices are here to stay. But in the longer term, cheap renewable energy should help push prices down as Britain builds more solar and wind farms in years to come.
Ofgem brought in the energy cap to limit how much households were paying for gas and electricity as prices of gas spiked in the wake of Russia’s illegal war on Ukraine.
Russia halted exports, putting pressure on natural gas supplies from elsewhere.
Dr Craig Lowrey, from Cornwall Insight said: “Fuel poverty has occupied political agendas for years, with little long-term progress. This winter, millions of households say they will not heat their homes to recommended temperatures, risking serious health consequences.
“With it being widely accepted that high prices are here to stay, we need to see action. Options like social tariffs, adjustments to price caps, benefit restructuring, or other targeted support for vulnerable households must be seriously considered.
“Long-term, our transition away from the volatile global wholesale market toward sustainable, home-produced renewables can help to secure our energy future. Although the transition does require upfront investment, it promises lower bills down the line.
“The government needs to keep momentum on the transition while acknowledging that immediate support is essential for those struggling now. Inaction is a choice to leave people in the cold.”
Ofgem’s assumptions are for a family using 2,700 kWh per year for electricity, and 11,500 kWh per year for gas.
It will reveal the latest price cap on Friday.