Household energy bills in Great Britain are projected to climb to approximately £1,999 annually from January, representing a 16% increase from current levels according to forecaster Cornwall Insight. The anticipated rise of £276 would constitute the largest quarterly jump since January 2023, when energy markets faced severe disruption. The prediction comes as households already face a 4% bill increase taking effect this week, with the price cap reaching its highest level in three years.
Analysts attribute the sharp forecast increase to recent surges in gas market prices that have reached three-year highs. European gas stores are currently at their lowest September level in 15 years, driven by multiple factors including delayed refilling after last winter’s mild conditions, increased power generation during summer heatwaves, and severely disrupted oil and gas exports from the Gulf region. Shipping threats through the Hormuz and Bab al-Mandab straits have further constrained supply as geopolitical tensions affect global energy markets.
The price cap forecast has reignited debate over government support measures. Energy industry leaders and anti-poverty advocates have called for enhanced assistance to vulnerable households facing a sixth consecutive winter of elevated energy costs. The government recently introduced a six-month VAT holiday on energy bills, providing approximately £45 in annual savings, but officials indicated they were considering additional measures to help households manage rising costs.
Ofgem, the energy regulator, will finalize January’s price cap based on wholesale prices recorded between mid-August and mid-November, meaning the forecast remains subject to change if market prices decline. However, Cornwall Insight stated that an increase was “all but certain” given price movements observed so far. Current charges effective from Thursday include electricity at 26.32p per kilowatt hour and gas at 7.97p per unit.
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