Warning of fresh energy bill shock in October as prices rise again

People have been warned to brace for another huge rise in energy bills when the next cap takes effect in October.

This could add another £629 a year to a typical bill, on top of Friday’s unprecedented £700-a-year rise, says energy consultancy Cornwall Insight.

The expected rise in bills just as colder weather kicks in has prompted calls for fresh government support to those struggling to pay.

Energy prices have been affected by the Ukraine war and pressure on suppliers.

The most up-to-date prediction from Cornwall Insight would, if accurate, push annual energy bills for a household using a typical amount of gas and electricity to up to £2,600 from October.

A typical bill is expected to fall back to the current level in summer 2023, although longer-term forecasts are tricky.

Bill Bullen, the boss of Utilita, warned that elderly people and children were at serious risk over the next winter because of a lack of heating.

“We are going to see an extra £500 or £600 added to bills in October, and frankly the chancellor’s going to have to fund that entirely for low-income households,” he told the BBC.

“He won’t be able to afford to take this problem away for everybody… but for customers who can’t respond to that price [increase], that’s where the help needs to be targeted.”

The warning comes on top of a huge rise in what energy suppliers can charge customers from Friday. The £693 a year rise in a typical energy bill will affect 18 million households, with 4.5 million customers on prepayment meters facing an even bigger increase of £708 a year.

At the same time, a host of bill hikes take effect with council tax, water bills and car tax going up for some on 1 April.

Minimum wage rates are rising which, along with some financial support from the government, is partially softening the blow.

Prices in general are rising at their fastest rate for 30 years, but the sudden increase in the cost of energy is the most significant for individuals.

New official figures suggest four in 10 bill-payers have been finding it very, or somewhat, difficult to afford their energy costs.

The governor of the Bank of England, Andrew Bailey, said the country is facing the biggest single shock from energy prices since the 1970s.

It is the largest increase, by far, in the energy regulator Ofgem’s price cap, since it was introduced.

The cap, set every six months for England. Wales and Scotland, is designed to protect domestic customers from the volatility of wholesale energy prices.

Chris O’Shea, chief executive of Centrica, which owns the UK’s largest supplier British Gas, said his business was supporting struggling customers and was giving grants to those most in need.

“We would love to do more. The reality is that for a retail energy company, the market has gone through quite a change, and profits have reduced quite substantially,” he told the BBC’s Big Green Money Show.

However, he accepted that profits had risen sharply for the heavily taxed exploration arm of the business.

The Office for National Statistics said that low earners, renters, parents, people with disabilities, unemployed people and divorcees were least able to afford a bill shock.

The government has said it was taking “decisive action” to help people with the cost of living, including a £200 reduction to energy bills in October – which needs to be paid back in instalments, and a £150 reduction in council tax bills for 80% of billpayers.

Speaking to BBC Breakfast, Sir Keir Starmer, the leader of the Labour party, branded the government’s response as “pathetic”.

He accused the government of forcing people to choose between heating their homes or eating.

He said that the Labour party would introduce a one-off windfall tax on the profits of oil and gas companies and use the money to help households struggling to cope with rising energy bills.

But Chancellor Rishi Sunak told the BBC’s Newscast: “I’m confident in what we’ve done. I know it’s tough for people. We’re facing a very difficult situation with the price of things going up and I want to do what we can to ameliorate some of that, but I’m also honest with people that we can’t ameliorate all of it, sadly.”

Are you affected by issues covered in this story?