Energy bills are expected to hit £5,300 annually in April next year, a huge increase from previous projections.
The dire news comes from energy consultancy Cornwall Insight in its final forecast before Ofgem confirms its October price cap this Friday.
Cornwall Insight’s forecast for October of this year fell very slightly from £3,583 for the average household, to £3,553.
The company said forecasts for the period have remained “fairly stable” in recent weeks, but a 15% increase in wholesale energy prices last week has changed its outlook for next year.
The forecast for January’s cap was £4,649.72 per year for the average household – compared with last week’s forecast that it would hit £4,266 at this point.
And April’s cap is forecast to hit £5,341.08 per year, compared with last week’s forecast that it would hit £4,427.
While the price is expected to fall by the end of 2023, it will remain very high – forecast at £4,767 in July and £4,807 in October.
It’s all a far cry from the £1,277-a-year price cap seen in October 2021.
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What is the energy price cap and why are the bills so high?
The price cap is not a maximum limit on energy bills, but rather a limit on how much suppliers can charge per kWh of energy used and the maximum daily charge.
The main factor driving the increase is the wholesale price of natural gas, which has skyrocketed since Russia invaded Ukraine in late February.
Labor and the Liberal Democrats have proposed freezing bills at current levels, while many of the largest energy suppliers support the same idea.
But the government has made it clear that it will not do anything significant until a new prime minister takes office on September 5.
Two candidates in the race to replace Boris Johnson as prime minister – Liz Truss and Rushi Sunak – have come under pressure to come up with detailed plans to cut bills.
