Watch the latest ITV News report explaining what the energy cap will mean for UK households Household energy bills are set to reach an average of £7,600 a year from next year, according to the latest forecast by specialist analysts. The worst outlook predicted comes after yesterday’s announcement that the energy price cap will rise by 80% as the gas and electricity market shows no sign of cooling. On Friday, regulator Ofgem announced that the cap would rise from £1,971 to £3,549 for the average household on a standard default tariff, starting in October. The energy price cap, which has almost doubled from already record highs in early October, could reach more than £5,600 by early next year and then rise further, according to the latest estimates. It comes as Chancellor Nadhim Zahawi acknowledged that even the middle class – on salaries of around £45,000 – will struggle to pay bills, which are expected to hit the most vulnerable in society hardest. Tory MP Robert Halfon tells ITV News “there will have to be government intervention Friday’s price hike announcement sparked widespread anger, calls for the government to offer more help to hard-hit households and a protest outside Ofgem’s London headquarters by activists vowing to boycott rising energy bills. Families could face poverty over the winter if they have to pay 24.37p per kilowatt hour for the gas they burn to keep their homes at a comfortable temperature. The price is currently 7.37p – already higher than ever. (PA Graphics) Credit: PA Graphics In the worst warning yet, energy consultancy Auxilione has predicted a bill of £7,700 from April 2023 – with gas costing consumers 34.22p per kWh. The forecast is an increase of £438 from Auxilione’s forecast on Friday morning, and almost £900 in just two days. Natural gas prices continue to rise in international markets, along with the price of electricity. Ofgem recently announced it will review the price cap every three months instead of twice a year, sparking fears of back-to-back bill rises. Ofgem can set the price cap to rise or fall, during quarterly reviews – meaning account limits can be set higher or lower every three months. Almost all changes to the price cap are to allow suppliers to recoup the costs they would incur in buying wholesale gas and electricity from the companies that generate it. Gas prices are a determinant of electricity prices because last year 42% of the UK’s electricity was produced by burning gas. The cap is the maximum price households would have to pay on their supplier’s default tariff for each unit of gas and electricity they used for the next three months. It is calculated on the basis of the wholesale price of natural gas and electricity and also includes tax subsidies, charges paid to energy networks, green contributions and social payments. An average household is considered to be one that uses 12,000 kWh of natural gas and 2,900 kWh of electricity in a year. How the current price cap is analyzed Credit: PA Graphics Gas prices were set at 14.92p per kWh from October and electricity will cost 51.52p per kWh. By April, Auxilione experts now expect electricity to cost 117.5p per kWh. The price cap was previously changed twice a year, but Ofgem is now allowed to review it every three months with changes expected in January, April, July and October 2023. UK gas prices were trading at around £6.40 per heat on Friday, around 13 times the levels before the Russian invasion of Ukraine. Want a quick and special update on the biggest news? Listen to our latest podcasts to find out what you need to know… Tory MP Robert Halfon, who is backing Rishi Sunak in the Tory leadership race, told ITV News on Saturday: “Unless you’re a millionaire, most people will struggle with their energy bills. “My own view is that the priority should be both for those people who are most vulnerable and those who are just for management.” And he continued: “Whatever happens, there will have to be a large-scale intervention by the government.”
