Energy bills forecast to reach £7,700 average from next year in latest expert price cap prediction
Watch ITV News' latest report explaining what the energy cap will mean for UK households
Households' energy bills have been forecast to hit an average £7,600 a year from next year, according to the latest expert analysts' prediction.
The worst outlook predicted yet comes after yesterday's announcement the energy price cap will be hiked by 80%, as the gas and electricity market shows no sign of cooling down.
On Friday, regulator Ofgem announced that the cap would increase from £1,971 to £3,549 for the average household on a typical default tariff, starting from October.
The energy price cap, which is set to nearly double from already record highs at the start of October, could reach more than £5,600 by the start of next year and then rise even further, under the latest estimates.
It comes as Chancellor Nadhim Zahawi acknowledged even middle-earners- on salaries of around £45,000 - will struggle to pay bills, which are expected to hit the most vulnerable in society hardest.
Tory MP Robert Halfon tells ITV News 'there's going to have to be an intervention from the government
Friday's price hike announcement sparked widespread anger, calls for the government to offer more help to struggling households, and a protest outside Ofgem's London headquarters by campaigners vowing to boycott soaring energy bills.
Families could face destitution over the winter if they have to pay 24.37p per kilowatt hour for the gas they burn to keep their homes at a liveable temperature.
The price is currently 7.37p -already higher than ever before.
In the worst warning yet, energy consultancy Auxilione forecast a £7,700 bill from April 2023 – with gas costing consumers 34.22p per kWh.
The forecast is an increase of £438 since Auxilione’s prediction on Friday morning, and up nearly £900 in just two days.
Gas prices are continuing to soar on international markets, along with the price of electricity.
Ofgem recently announced it would review the price cap every three months instead of twice annually, sparking fears of consecutive bills hikes.
Ofgem can set the price cap to go up or down, during its quarterly reviews- meaning bills thresholds can be set higher or lower every three months.
Almost all of the changes in the price cap are to allow suppliers to recoup the costs that they will have buying gas and electricity wholesale from the companies that produce it.
Gas prices are decisive for electricity prices, because over the last year 42% of the UK’s electricity was generated by burning gas.
The cap is the maximum price that households on their supplier’s default tariff would have to pay for every unit of gas and electricity they used for the next three months.
It is calculated based on the wholesale price of gas and electricity and also includes allowances for tax, charges paid to the energy networks, green levies and social payments.
An average household is considered to be one that uses 12,000 kWh of gas and 2,900 kWh of electricity in a year.
Gas prices were set at 14.92p per kWh from October, and electricity will cost 51.52p per kWh.
By April, the experts at Auxilione now expect electricity to cost 117.5p per kWh.
The price cap was previously changed twice a year, but Ofgem is now allowed to review it every three months with changes expected in January, April, July and October 2023.
UK gas prices were trading at around £6.40 per therm on Friday, around 13 times their levels before the Russian invasion of Ukraine.
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Tory MP Robert Halfon, who is supporting Rishi Sunak in the Tory leadership race, told ITV News on Saturday: "Unless you're a millionaire, most people are going to struggle with their energy bills.
"My own view is the priority must be for both those people who are most vulnerable, and those who are just about managing."
He continued: "Whatever happens, there's going to have to be a large scale intervention from the government."