More than four million households will see their energy bills rise by 4% from Thursday, October 1, adding £60 a year to the typical bill and taking it to £1,723. The increase arrives just as cooler weather prompts millions to turn on their heating.
January forecast: bills could near £2,000
Analysts at Cornwall Insight predict the typical dual-fuel bill will jump 16% to £1,999 from New Year’s Day, the largest rise in four years. The grim forecast is blamed on turmoil in the Middle East, with gas supplies choked after the vital Strait of Hormuz shipping route was effectively closed.
European gas reserves are at their lowest September level for 15 years. Cornwall Insight’s Dr Craig Lowrey warned: “These prices are going to hit households hard.
“January is already a difficult month for many, with cold weather and bank balances still recovering from Christmas, and now they face the biggest price cap rise we’ve seen in four years.”
Government VAT cut and calls for more help
He warned the effects of the conflict could be felt for “many more months”. From today, the typical household in England, Scotland and Wales paying by direct debit for gas and electricity will see its bill rise by around £5 a month.
The Government has axed the 5% VAT on household electricity bills until the end of March, saving the average bill payer around £45 a year. It was one of Prime Minister Andy Burnham’s first moves after entering Downing Street in July. Households will continue to pay 5% VAT on gas, while experts are calling for further help in next month’s Budget.
National Energy Action boss Adam Scorer said: “The Autumn Budget must deliver additional targeted support for households most at risk this winter.”
Advice for households and next steps
Households without smart meters have been urged to submit readings before the new prices kick in to avoid paying the higher rate for energy used before October 1. Ofgem will announce the final price cap for January to March in November.
