Energy bills set to rise by £146 a year amid global political turmoil

Energy bills for most households in Britain are expected to rise by an average of £146 to £1,714 a year from October 1, as wholesale gas prices rebound amid mounting global political turmoil.
Ofgem is set to lift the price cap by 9 per cent, from £1,568 for the present quarter, when it updates the ceiling on Friday, according to Cornwall Insight, an industry forecaster.
An increase would be the first since January last year, when the price cap hit a record high of an annual £4,279, after the outbreak of war in Ukraine caused energy prices to soar. The price jump prompted the government to intervene and to subsidise bills through the energy price guarantee, limiting a typical household bill to £2,500 a year.
Fresh tensions between Ukraine and Russia could push the price cap even higher at the start of next year, the consultancy said, as the energy market was yet to recover from last year’s upheaval and remained highly sensitive to any global events that could disrupt supply. Britain’s reliance on imported energy leaves it very vulnerable to this global volatility.
European wholesale gas prices are close to their highest level since February at €39.80 per megawatt/hour, having risen from a 30-month low of €24 per MW/h. However, that is still about 77 per cent below the peak of August 2022.
“This is not the news households want to hear when moving into the colder months,” Craig Lowrey, principal consultant at Cornwall Insight, said. “Following two consecutive falls in the cap, I’m sure many hoped we were on a steady path back to pre-crisis prices. However, the lingering impact of the energy crisis has left us with a market that’s still highly volatile and quick to react to any bad news on the supply front.
“Despite this, while we don’t expect a return to the extreme prices of recent years, it’s unlikely that bills will return to what was once considered normal. Without significant intervention, this may well be the new normal.”
The energy price cap, introduced by the government in 2019, limits the price that suppliers can charge households for each unit of gas and electricity on standard tariffs. It was designed to protect consumers and is updated regularly, based on the regulator’s assessment of the costs that an efficient supplier should incur.
An increase would lead to renewed pressure on millions of households that have struggled to pay their bills as energy costs have risen sharply. Bad debts, which are unlikely to be recovered, have risen to a record £3.1 billion, according to the latest figures from the energy watchdog. About ten million pensioners already were set to feel the pinch in the colder months after the chancellor scrapped the winter fuel allowance for those not in receipt of pension credit or some other means-tested benefits.
“It’s another difficult week on the cards for households, who will learn just how bad energy bills will be this winter,” Simon Francis, of End Fuel Poverty Coalition, a campaign group, said. “The reality is that bills will go up compared with today and will be about 65 per cent higher than they were before the energy bills crisis started.”