As energy bills become more expensive starting Jan. 1, respected forecasters have said they could rise further in the spring rather than the fall as originally predicted.
THE energy price cap increases from January, bringing the cost of a typical annual bill to £1,738 – £21 more per year than between October and December.
Bills had already become more expensive from October, rising 10% a year – or £12 a month.
But now the expected decline in April will not materialize, according to energy consultant Cornwall Insight.
Instead, the company said the cost in April is expected to rise to £1,785 per year for a typical consumer, an increase of almost 3% on the January cap, or around £4 more per month on the average bill.
Compared to the three months from July, it will cost £217 more per year, according to forecasts.
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Bill payers have seen energy costs rise every three months since July. Energy regulator Ofgem reviews its price cap four times a year, setting the maximum a supplier can charge per unit of gas and electricity.
It is assessed based on the amount charged to suppliers themselves to provide electricity and is intended to protect consumers and utilities.
Why are bills increasing?
Continued volatility in international energy markets is driving these cost increases.
EU gas storage levels and uncertainty over Russia’s gas transit deal with Ukraine have contributed to “a level of volatility we haven’t seen in months”, according to Cornwall Insight’s principal consultant, Dr Craig Lowrey.
The unknown impact of the Trump presidency on liquefied natural gas (LNG) flows means the company said its forecasts would “display a high degree of variability.”
These events led to a rise in wholesale prices, impacting the amount charged to households in the UK.
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Those forecasts “could very well go up or down several times before the April cap is set,” Dr. Lowrey said.
The official announcement of the energy price cap for the three months starting in April will take place on February 25.
Any changes to the fixed rate, the fixed daily amount to receive gas and electricity, also influence bills.
Ofgem is consulting on introducing an option to include zero standing charge options alongside existing tariffs, providing more choice for consumers.
As of December 31, Cornwall Insight forecasts a fall in the ceiling price in July before an increase in October.