Energy bills for many British households are set to rise again this spring, as rising fuel prices and rising network costs put new financial pressures on millions of households.
Forecasts from Cornwall Insight, the energy company, show that the Ofgem price could rise by around one per cent to £1,762 a year for a dual-fuel household in April, reversing earlier forecasts of a slight fall. The new figure is just over £1,738 effective from January and continues to be a marked rise from pre-crisis averages of around £1,100 a year.
Other proposed price adjustments—such as subsidies for energy-intensive industries—would add another £20, bringing the total to £1,782 a year.
European fuel prices have seen a volatile year. After dipping to €24 per megawatt hour in February, they have bounced back close to a one-year high of €45.5 per MWh. Demand from Asia, driven by record high summer temperatures, has intensified global competition for liquefied natural gas (LNG), which Britain relies heavily on as it reduces its reliance on Russian pipeline supplies following the Ukraine invasion.
Ofgem, the UK’s energy regulator, has warned that continued reliance on LNG sales is likely to keep gas markets volatile into next year. Craig Lowrey, senior consultant at Cornwall Insight, described the 2024 outlook as “a perfect storm of regulatory changes and market upheaval,” adding that “while a major price increase is unlikely at present, the extent of any increase will depend on how the market behaves.” and regulatory changes are progressing.”
The energy rate, introduced in 2019, limits the amount that suppliers can charge per unit of gas and electricity. It is recalculated periodically to reflect the cost of a successful supplier. However, the result is that even at current levels, households are facing debts that are almost 50 percent higher than those seen before the energy crisis began.
Consumer advocates remain concerned. Simon Francis, co-ordinator of the End Fuel Poverty Coalition, commented: “The latest forecast shows that households will pay around 70 per cent more than they did in the winter of 2020/2021. That means an extra £750 a year, forcing more people to live in cold, damp homes and risk the health consequences of fuel poverty. “
As fuel prices have risen due to political tensions, including the conflict in Ukraine, the Labor Party has proposed accelerating Britain’s transition to renewables to reduce exposure to rising fuel prices. According to research by think tank Ember, renewable sources are on track to provide more electricity to the UK grid than fossil fuels this year for the first time, offering a glimmer of long-term relief amid imminent cost pressures.
