UK energy bills to soar towards £3,400 a year this winter, suggests research

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UK households face a 65 per cent increase in their gas and electricity bills this winter to more than £3,200 a year, according to research that highlights the escalating cost of living crisis.

Energy consultancy Cornwall Insight said the energy price cap for the average home is now expected to reach £3,244 when it is revised by regulators in October, up from £1,971 in April. Cornwall predicted the price cap would rise further to £3,363 in January.

Morgan Wild, head of policy at Citizens Advice, said it would be “hugely worrying news for families . . . being pummelled from all sides by rising costs”, adding: “The government has stepped in with welcome support on energy bills, but . . . it must make sure money reaches those who need it most.”

After Russia cut its gas exports to Germany last month in apparent retaliation against western sanctions following the invasion of Ukraine, it is likely that prices will rise. In the last month, gas prices have nearly doubled, as they feed into electricity and home heating costs.

Although the UK only receives a small amount of its gas from Russia, the prices are very similar to European mainland prices. Both markets are connected via pipelines which allow gas to flow to the areas where it is needed. The UK is heavily dependent on import gas to produce around a third of its electricity, and heat most of its homes.

The government has already offered support to households in the form of a council tax rebate and a £15bn support package, which should add up to about £1,200 for the 8mn households on means-tested benefits.

But campaigners have indicated that more help will probably be needed given the scale of the increase, as government measures were decided back when ministers thought the average bill would rise to roughly £2,800 rather than close to £3,400.

After Johnson announced his resignation, it is expected that the key pillar of the race to replace Boris Johnson as leader and prime minister of the Conservative party will be how much assistance households can get with their rising energy bills.

Describing the expected increase as “absolutely horrifying”, the End Fuel Poverty Coalition called on candidates in the contest to “commit to further, short-term, financial support for people in fuel poverty this winter” and to “mitigate any further increases in the price cap” above £2,800.

Single-earner households earning the average UK salary would have energy bills that equaled almost 15% of their take-home pay. In 2019, before the pandemic and Russia’s invasion of Ukraine, the price cap for the average household was set below £1,200.

Ofgem, the energy regulator, has been subject to severe criticism following the collapse of many smaller energy retailers. Many of these costs were passed on to taxpayers and bill-payers.

Jonathan Brearley, Ofgem’s chief executive, on Friday said record gas prices were “driving the Cost of living crisis, causing real harm to customers and the wider economy”.

The regulator is making preliminary proposals to lower energy bills over the long term. These include moving away from imported gasoline and reforms to wholesale electric markets to reduce gas’s price impact.

Gill Plimmer, London: Additional reporting

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