Millions face second record energy price hike this year, analysts warn

Millions of households could face a second record energy price hike this year which would lift the average gas and electricity bill to £2,255 from October, intensifying the UK’s cost of living crisis.

Energy bills are expected to soar to almost £2,000 a year from April under the regulator’s energy price cap, and industry analysts have warned that a second surge in October could drive bills more than 75% above today’s prices.

The energy price cap, which sets a limit on default energy tariffs used by 15m households, climbed to an average of £1,277 this winter in the steepest bill increase since the cap was introduced in 2019.

The level of the cap is expected to surge to £1,925 from 1 April, according to analysts at consultancy Cornwall Insight, and rise again in October, unless the government takes action to help prevent millions of people from plunging into fuel poverty.

The number of households who are in ‘fuel stress’ because they are unable to pay their energy bills is expected to treble overnight to 6.3m across the UK from 1 April, according to research from the Resolution Foundation thinktank.

The research has added to growing calls for ministers to take urgent action to avert a national energy crisis, triggered by a global gas supply crunch, including proposals that the Treasury scraps VAT on energy bills and moves green levies and other policy costs into general taxation.

Gareth Miller, the chief executive officer at Cornwall Insight said: “It is not helpful for government to keep pointing to the default tariff cap when pressed on what action it is taking. The cap will not protect consumers from increases in gas and power prices in the long run.”

Miller warned the government against “quick fixes” to counter the record energy market highs which threaten the livelihoods of households and businesses in favour of a rethink of the UK’s energy sources. He urged ministers to “look again” at low-carbon energy technologies which could protect the UK from a boom in international fossil fuel prices, and consider homegrown gas supplies because “where we get gas from is irrelevant so long as we stick to a declining usage as we move to net zero”.

“The current energy crisis is of economy wide concern, having a potential impact on business competitiveness, general inflation, and household affordability,” Miller said. “It is vital that the magnitude and speed of actions match the scale of risk faced by the economy from the current situation, and that attentions turn away from quick fixes, and instead focus on large scale reform of the energy system.”

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