UK energy bills forecast to jump by £276 as price cap rises

What happened

Households in Great Britain paying by direct debit for dual-fuel energy will see their annual bills increase to £1,723 starting from Thursday, following a 4% rise in Ofgem’s price cap. This immediate hike amounts to approximately £60 per year compared to the previous period.

Looking further ahead, figures from Cornwall Insight indicate that the price cap is poised to jump by another 16% for the January to March quarter. This shift would raise the equivalent annual dual-fuel bill to £1,999, representing an additional £276 increase. Analysts describe this as the largest quarterly rise since January 2023.

The immediate October increase involves unit costs rising from 26.11p to 26.32p per kilowatt hour for electricity, and from 7.33p to 7.97p per kilowatt hour for gas. The forecasted January boost is attributed to wholesale gas market prices reaching three-year highs.

What the sources say

Both The Guardian and the Daily Mail report the imminent 4% rise in energy unit costs and the projected 16% increase for early 2027 driven by Cornwall Insight forecasts. Both outlets attribute the current volatility to geopolitical tensions impacting global gas supplies.

The Daily Mail adds significant detail by quoting Simone Rossi, CEO of EDF Energy, who warns that Britain is ‘walking into a second significant energy crisis.’ He specifically links the price surges to the US-Israel war on Iran, noting disruptions to exports from Qatar and Russia. The Guardian focuses more heavily on the technical impact, specifying the exact pence changes per kilowatt hour for electricity and gas.

Regarding policy responses, the Daily Mail reports that Prime Minister Andy Burnham does not consider Rossi’s warning an overstatement and is considering extending VAT cuts on electricity bills beyond March 31. It also mentions industry calls for the approval of the Jackdaw gas and Rosebank oil fields off the Scottish coast. The Guardian provides data on recent US-Iran tensions driving global prices but does not quote EDF’s specific crisis warnings or the Prime Minister’s reaction.

Why it matters

The January forecast represents the highest quarterly increase in four years, coinciding with cold winter months when bank balances are recovering from Christmas. Dr Craig Lowrey of Cornwall Insight stated that gas stocks in Europe are at their lowest levels in 13 to 15 years, raising concerns over supply resilience.

Industry experts warn that even if the Middle East conflict ends immediately, supply disruptions would take months to correct. There are fears that depleted European gas storage inventories could force higher purchases next summer to rebuild stocks before the 2027/8 winter, potentially pushing prices up further.