Millions of households in the UK are set to experience a larger-than-expected increase in their annual energy bills, with costs rising by £85 from April due to a decline in Europe’s gas storage levels, analysts warn.
The average gas and electricity bill for households in England, Scotland, and Wales is projected to increase by nearly 5% to £1,823 per year under the energy regulator’s price cap. This forecast, from consulting firm Cornwall Insight, surpasses its previous estimate of £1,785, following colder weather and reduced renewable energy generation, which has contributed to falling gas storage levels across Europe.
The energy regulator, Ofgem, will confirm the new energy price cap for the three months from 1 April on 25 February. In January, the regulator had already raised the cap by 1.2%, setting it at £1,738 per year for a typical household.
The latest increase follows the cessation of Russian gas deliveries via Ukraine’s pipelines on New Year’s Day after the expiry of a five-year transit deal between the two countries.
If confirmed, this would mark the third consecutive quarterly rise in household energy costs, challenging the UK government’s pledge to reduce energy bills by “up to £300 by 2030.”
Consumers who use more than the typical amount of energy could face even higher bills, as the energy price cap limits the unit rate suppliers can charge rather than setting a fixed total bill amount. Approximately 9 million households on variable tariffs tied to the price cap will be affected immediately, while those on fixed tariffs will see the impact later.
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