Brits set for painful hikes to energy bills despite more support, warn analysts
Household energy bills will continue to rise next year from record levels this winter, putting Brits under more pressure over the coming months, warn analysts.
Chancellor Jeremy Hunt extended the Energy Price Guarantee for a further 12-months from April at the autumn statement yesterday.
The support package will be slightly tapered, with average household bills priced in at £3,000 per year rather than £2,500 per year for the extended phase of the scheme – based on current wholesale price forecasts.
This equates to a £700-plus saving for energy users, with Cornwall Insight calculating the price cap at £3,739 per year from April in current market conditions.
It also predicts the full cost of the Energy Price Guarantee will rise to £39bn, which is considerably less than the £100bn-plus estimates for the original scheme before it was slashed by Jeremy Hunt, but is still around 60 per cent of the cost of the historic furlough package during the pandemic.
Dan Atzori, research partner at Cornwall Insight, believed the extended support scheme would be a “welcome shield” but still represented a £1,000-plus hike on energy bills from April, and a near trebling on typical household energy bills prior to the industry crisis and Russia’s invasion of Ukraine.
He said: “It will be critical to reassess support going into next winter before longer-term reforms are introduced in 2024.”
Industry group Energy UK also feared that people will still struggle to pay their energy bills, raising the question over whether further assistance might be needed for more vulnerable households.
Director of advocacy, Dhara Vyas, said: “Continued support for all households in 2023 is very welcome – but, at £3000 for an average home, many people still won’t be able to afford their energy bills.
“Suppliers will continue to do all they can to provide additional assistance and support for people who need it most. We look forward to working closely with Government on getting support to consumers and businesses that need it.”
Meanwhile, the Energy Bills Relief Scheme for businesses has been kept intact – with a ‘maximum discount’ £345 per megawatt hour for electricity and £91 per MWh for gas.
It is set for review later this year, with more targeted support expected to be unveiled form April.