Household energy bills could rise over £600 this winter, warns energy specialists Cornwall Insight, as the cost of living crisis worsens.
The invasion of Ukraine and subsequent sanctions on Russia are making wholesale prices increasingly volatile, raising the prospect of further spikes.
This could place even more pressure on struggling households, which are already struggling with rising grocery bills and skyrocketing prices at the pumps.
Its latest forecast suggests the consumer price cap could spike to £2,599 per year for average use.
This would mean energy prices would have doubled in just one year.
Market regulator Ofgem already hiked the price cap this month to nearly £1,971 per year this month, a painful 54 per cent rise on last October’s limit of £1,277.
This reflects spiralling natural gas prices, which soared to an eye-watering £8 per therm and remain elevated at £2.57 per therm.
For context, prices were 42p per therm this time last year.
With at least four months to go until the winter cap is announced, predictions for the cap are likely to change.
For instance, earlier forecasts from Investec and Goldman Sachs estimated the price cap could rise to £3,000 per year, with Cornwall Insight’s latest estimate significantly below those levels.
However, a further rise still seems inevitable.
Octopus chief executive Greg Jackson the latest industry voice to forecast rising energy bills this winter, following similar gloomy predictions from Ofgem chief executive Jonathan Brearley and EnergyUK chief executive Emma Pinchbeck.
The most recent hike in the price cap saw the government announce a £9bn rebate scheme for households – consisting of a £200 loan and a potential £150 council tax saving on households in bands A-D.
However, Dr. Craig Lowrey, principal consultant at Cornwall Insight, warns more help may be needed this winter.
He said: “While the government’s £350 worth of support will provide some respite to consumers this time around – all-be-it not far enough – with the cap almost guaranteed to rise again, the government will need to look at expanding the scale and scope of this support after October at the very least.”
The consultant also hammered the consumer price cap, suggesting spiralling energy bills reflect the limitations” of the mechanism.
Dr Lowrey explained: “The energy market is a different place even from two months ago, let alone four years ago when the cap was introduced, with these latest figures further highlighting that the cap serves to defer wholesale price increases – not eliminate them. “