Energy bills rise by £60 today as price cap hike takes effect before another £276 rise in January
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A 4 per cent hike to Ofgem's energy price cap took effect today amid warnings that household bills could soar by almost another £300 from January.
Campaigners urged the Government to make plans now to support all households with energy costs this winter because of the severity of forecast bill hikes.
The stark warning comes as experts at Cornwall Insight predicted that the price cap will rise by a further 16 per cent to £1,999 a year on January 1.
Such an increase would be up by £276 on the level between October and December and the biggest rise since January 2023.
Today, the bill for the average household in England, Scotland and Wales paying by direct debit for gas and electricity reached £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 are affected by the increase.
Cornwall said its latest predicted 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.
In an effort to help households, the Government has temporarily removed the 5 per cent VAT from electricity bills until March 31 next year to cut around £45 a year.
Prime Minister Andy Burnham on stage at the Labour Party Conference in Liverpool yesterday
Households will still pay 5 per cent VAT for gas.
Prime Minister Andy Burnham said: 'For many families, the energy bill is the one they dread the most. I don't accept that it has to be this way, and I am determined to bring down costs for good.
'But I know people can't wait. Families need breathing space now.
'That's why, from today, VAT is gone from your electricity bill. And we're going further, capping bus fares at £2 from January and cutting business rates for pubs, social clubs and live music venues.'
The End Fuel Poverty Coalition urged ministers to prepare an 'emergency heat tariff' to cap the cost of heating this winter, with gas prices already rising 27 per cent year on year.
Simon Francis, co-ordinator of the coalition, said: 'With the number of households in fuel poverty set to soar again and at the most dangerous time of the year, the Chancellor has no choice but to act to provide increased targeted support to vulnerable households and plan to deliver wider universal help for people facing a sixth winter of high energy prices.
'If ministers do nothing, millions will spend this winter in cold, damp homes, unable to cook a hot meal. People will get ill. Some will die.
'Every one of those avoidable cases will be on this Chancellor's watch.'
It comes after Simone Rossi, chief executive of supplier EDF Energy, warned Britain is 'walking into a second significant energy crisis'.
Simone Rossi, chief executive of supplier EDF Energy, has warned of a 'second energy crisis'
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Mr Rossi believes the price of petrol, diesel and gas will increase because of 'geopolitical forces that we do not control'.
He said the next energy crisis would follow the last one in 2022 when demand surged after the pandemic and supplies were disrupted by Russia's invasion of Ukraine.
Ofgem said the increase to its price cap reflected higher wholesale gas prices as a result of the ongoing conflict in the Middle East, with volatile global markets remaining the dominant driver of price changes.
The blocking of the Strait of Hormuz – a major oil shipping lane – has seen the price of fuel and electricity spike at a rate last seen following Russia's invasion of Ukraine.
Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.
The energy regulator will announce its next price cap, covering January to March 2027, in November.
The energy price cap was introduced by the Government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use.
It does not limit total bills because householders still pay for the amount of energy they consume.
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