Key facts
- UK household energy bills are forecast to rise by 4% this winter.
- The energy price cap is expected to increase to £1,729 annually from October.
- Soaring wholesale gas prices, linked to Middle East events, are driving the increase.
- The government's VAT cut on electricity bills is unlikely to fully offset the rise.
- The UK's dependence on imported natural gas is cited as a major vulnerability.
Household energy bills across Great Britain are expected to climb to a three-year high this winter, with the energy price cap on track to rise by 4% from October. This increase, which would bring the typical annual dual fuel bill to £1,729, is largely driven by soaring wholesale gas prices influenced by events in the Middle East. Analysts at Cornwall Insight project electricity rates will rise to 26.57p per kilowatt hour and gas charges to 7.90p per kWh for households paying by direct debit.
The anticipated rise in energy costs is expected to more than offset the government's promise to cut VAT on household electricity bills, a measure intended to provide some relief on living costs. Craig Lowrey, a principal consultant at Cornwall Insight, noted that energy bills remain tied to international events and emphasized Britain's heavy reliance on imported natural gas as a key vulnerability.
Cornwall Insight also anticipates further bill increases in January, contingent on developments in the Middle East. Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, highlighted that wholesale gas prices have reached a near four-year high, exacerbating concerns for consumers. Ralston pointed out the UK's particular dependence on gas for home heating, suggesting a need to reduce this reliance, similar to efforts by European neighbours.