Energy bills set to see biggest rise in four years in January, experts warn

Household energy bills are forecast to see the biggest hike in four years as experts warned a typical bill could soar by nearly £300 in January due to the Iran war.

Experts at Cornwall Insight have predicted the average dual fuel energy bill will rise by 16% to £1,999 a year on January 1, up by £276 on the level between October and December and the biggest rise since January 2023.

Cornwall said the increase is driven by the escalating conflict in the Middle East, which has disrupted gas supplies to the UK and worldwide as the vital Strait of Hormuz shipping route has been effectively closed since the Iran war began in February.

Storage levels of EU gas are now at their lowest September level for 15 years, Cornwall Insight said.

The stark warning comes ahead of the October 1 rise in Ofgem’s energy price cap, which will see bills jump by 4%.

The increase on Thursday will mean the energy bill for the average household in England, Scotland and Wales paying by direct debit for gas and electricity reaches £1,723, up £5 a month or £60 a year if this level was sustained over 12 months.

More than four million homes who remain on a standard energy tariff will be impacted, coming at a time when cooler temperatures will see many switching on their central heating.