- Gas and electricity bills to rise again in 2024, says Cornwall Insight
- Predictions about rising bills negate earlier good news that costs could start to fall
Energy bills could rise faster than expected due to war, strikes and possible sabotage, experts have said – between £89 and £110 a year.
The average household currently pays £1,834 a year for gas and electricity bills as they are subject to a tariff regulated by Ofgem’s price cap, which is set four times a year.
Energy analysts at Cornwall Insight previously thought the typical energy bill would rise slightly by £63 in January 2024 and then remain below the current level of £1,834 for the rest of 2024.
But Cornwall Insight’s latest predictions are that Ofgem’s cap price will rise from £1,834 now to £1,923 in January, an increase of £89 a year, instead of £63.
Grim news: Expert analysts believe household energy bills could rise again next year
From April 2024, Cornwall Insight believes the cap price will rise slightly to £1,929, £110 a year more than it predicted in September.
Then, from the third quarter of 2023, the average energy bill will fall to £1,879, Cornwall Insight believes, £98 more than its previous predictions.
In the last three months of 2024, a typical household will pay £1,916 in gas and electricity bills, an increase of £91 on Cornwall Insight’s previous assessments.
Why are energy bill forecasts changing?
Cornwall Insight said it had raised its forecasts for a number of reasons.
The war between Israel and Hamas, the strike at Australian gas production facilities and possible sabotage of the Scandinavian Balticconnector gas pipeline are affecting global energy price expectations, Cornwall Insight said.
Why have I seen two figures for Ofgem’s price cap?
- There are two figures for average energy usage for the October 1 price peak: £1,923 and £1,834.
- The reason is that since October 1, Ofgem not only changed the price cap but also what it calls average energy consumption.
- This is because consumers have been using less energy than the regulator thought.
- Using the old assumptions, the maximum price fell from £2,074 a year to £1,923 on 1 October.
- The figure of £1,834 is much lower than £1,923, but it does not mean that consumers are magically being charged much less than they were.
Craig Lowrey, principal consultant at Cornwall Insight, said: ‘The jump in peak price predictions since September has once again highlighted the vulnerability of UK energy prices (and customer bills) to geopolitical events.
“The Russian invasion of Ukraine demonstrated that there is a delicate balance in the global energy market that can be easily upset by unexpected events; the current situation appears to repeat that pattern.”
Richard Neudegg, regulatory director at Uswitch.com, said: ‘As temperatures drop and we start using more energy at home, predictions that energy prices could rise will cause real jitters in households over the standard variable rate.
“Cornwall Insight’s revised predictions for where the price cap could go reflects a higher level of uncertainty in the wholesale market.”
Regulator Ofgem makes no predictions about how the price cap will change in the future, although chief executive Jonathan Brearley has previously warned customers it “cannot offer any certainty that things will improve this winter”.