Energy bills predicted to rise again in six weeks

Households across the UK are bracing for another significant increase in energy costs this autumn, according to forecasts from a leading business consultancy.

Cornwall Insight predicts that the energy price cap will rise to £1,714 per annum in October, marking a 9% increase from the current cap of £1,568 for a typical consumer.

The official announcement of the October price cap is expected from Ofgem, the energy regulator, on Friday, August 23. This impending rise comes as a reminder that the energy market remains unstable, despite some stabilisation in recent months.

Cornwall Insight’s analysis suggests that the upward trend may continue into the new year.

“We currently forecast the cap will show a further modest increase in January 2025. However, recent tensions in the Russia-Ukraine war could see prices rise further at the start of the new year,” the consultancy stated.

The primary driver behind this forecast uptick in bills has been the rebound in gas and electricity wholesale prices from their 30-month lows in February. This increase has been particularly noticeable since the beginning of August.

While the market has shown signs of recovery since the height of the energy crisis, it has not fully rebounded from the impact of Russia’s invasion of Ukraine. Cornwall Insight emphasises that the market remains “highly sensitive to any global events that could disrupt supply.”

The UK’s heavy reliance on imported energy leaves it particularly vulnerable to global market volatility.

As a result, both household and business energy bills are expected to remain significantly above pre-crisis levels for the foreseeable future.

In light of these projections, Cornwall Insight is calling for measures to protect vulnerable consumers from rising energy costs.

The consultancy suggests several potential solutions, including “the introduction of social tariffs, revising benefits, or adjusting the price cap mechanism.”

Meanwhile, Ofgem is conducting a comprehensive review of the price cap, with potential changes to elements such as the standing charge expected over the coming year.

These revisions could have significant implications for how energy costs are calculated and distributed among consumers.

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