London — Household Energy Bills Forecast to Rise £276 in January

A typical UK household energy bill is forecast to rise to £1,999 a year from January, a 16% increase that would be the steepest jump in four years, according to figures shared with the BBC by consultancy Cornwall Insight.

What is changing on Thursday?

Ofgem's October price cap takes effect this week, raising prices for roughly 20 million households in England, Scotland and Wales that pay by direct debit on variable tariffs. That change adds about £60 a year — around £5 a month — pushing a typical annual bill to £1,723, Cornwall Insight said. The increase would have been larger without a government VAT cut on electricity, which also starts Thursday and knocks about £45 a year off a typical bill.

Why is the January forecast so much higher?

Cornwall Insight's forecast points to disrupted gas supplies tied to the conflict in the Middle East and resulting low gas storage levels across Europe. Rebuilding those stocks, the consultancy said, could keep bills elevated "well beyond the winter." Craig Lowrey, principal consultant at Cornwall Insight, said the timing compounds the pain: "These prices are going to hit households hard. January is already a difficult month for many, with cold weather and bank balances still recovering from Christmas." Lowrey described a January rise as "all but certain."

Is the £1,999 figure final?

No. Ofgem will not confirm the actual January price cap until late November, and the price-setting period for that cap is already halfway through. The BBC notes that an easing of Middle East tensions could soften the increase, but with no truce or drop in international energy costs yet visible, a significant rise for households not on fixed tariffs looks likely.

What are officials and industry saying?

EDF chief executive Simone Rossi has warned the UK is "walking into a second energy crisis" and called for the VAT cut on electricity to be extended beyond Thursday's implementation. Asked about that warning, Prime Minister Andy Burnham told BBC Radio 4's Today programme he would not call it an overstatement, saying the cost of home energy, along with petrol and diesel, was "very difficult indeed." Speaking from the Labour party conference in Liverpool, Burnham said the government was "looking at any measure that can give people breathing space, that can take the pressure off."

The numbers at a glance

• Current typical annual bill after Thursday's price cap change: £1,723
• Forecast typical annual bill from January: £1,999
• Size of forecast January increase: £276, or 16%
• Effect of the government's VAT cut on a typical bill: roughly £45 a year

What to watch

• Ofgem's confirmed January price cap announcement, expected late November
• Whether Middle East gas-supply disruptions ease before the cap is finalized
• Any government decision on extending the VAT cut on electricity past Thursday
• European gas storage levels as suppliers work to rebuild reserves

Cornwall Insight has a track record of forecasts that are closely watched across the energy industry and in politics, and similar projections have come from energy suppliers, according to the BBC.