Nine million homes will face higher energy bills from Wednesday as Britain braces for freezing temperatures and snow warnings for the new year period.
The average energy bill for households across England, Scotland and Wales will rise by 1.2% from New Year’s Day to £1,738 a year for a typical household after the energy regulator raised its cap on gas and electricity charges.
The rising price cap is expected to pile pressure on household finances during the coldest months of the year when millions of homes have already racked up record levels of debt to their energy suppliers.
Britain enters the new year with a series of weather warnings across the country for heavy rain, wind and snow. By the weekend, temperatures across many areas of the country are expected to fall below zero, which fuel poverty campaigners fear will take a toll on the more than 8 million customers living in cold, damp homes.
Bills are expected to creep higher again in April to an average of £1,785 a year, according to forecasts by consultants at Cornwall Insight – almost £600 a year more than the price cap before Russia’s invasion of Ukraine in February 2022.
Households could face even higher bills if they use more than the typical amount of energy. This is because the cap, which is recalculated every three months, limits the rate energy suppliers can charge customers for each unit of gas and electricity – not the total bill. About 9m homes on variable tariffs linked to the price cap will see an immediate impact on their bills, while it will be delayed for others on fixed tariffs.
Simon Francis, a coordinator of the End Fuel Poverty Coalition, said: “The public have seen first-hand the impact of the energy bills crisis – driven by the UK’s reliance on volatile energy markets.”
“Millions of people are living in cold, damp homes, unable to heat their homes to a safe temperature or racking up massive debts – with some even turning to loan sharks. To add insult to injury, around a quarter of what is spent on heating our draughty properties is wasted, because the UK’s old housing stock is some of the worst insulated in Europe,” he said.
Craig Lowrey, a principal consultant at Cornwall Insight, blamed “turbulence” in the energy wholesale markets for the forecast increase to the April price cap, which Cornwall previously predicted would fall.
Lowrey warned that energy markets faced “a level of volatility we haven’t seen for months”, in part because of the uncertain geopolitical situation in Ukraine and the Middle East and with Donald Trump’s presidency on the horizon.
Caroline Simpson, a campaigner at Warm This Winter, a coalition of more than 40 charities, said the UK needed “long-term solutions” to tackle rising energy bills.
“A comprehensive insulation programme is the quickest and easiest way to bring down bills permanently because in real terms the average household is paying more than £700 extra to use similar levels of energy as a few winters ago,” she said.
“We have 8.8 million adults living in cold, damp homes, exposed to the health complications that come from living in fuel poverty and while we welcome recent initiatives from Ofgem, insulation and ramping up renewables to get us off volatile oil and gas for good is what we need,” she said.
Miatta Fahnbulleh, the minister for energy consumers, said: “As long as Britain remains exposed to the rollercoaster of global fossil fuel markets, we will be vulnerable to energy price rises over which we have no control. The government’s clean energy mission is the route to protecting consumers and bringing down bills for good, which is why this government is delivering a new era of clean electricity for our country.”
The government’s warm-home discount is expected to support 3m eligible households this winter. The government is also driving the uptake of pension credit, and has encouraged energy suppliers to offer more than £500m in support to customers this winter.
