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Household energy costs in the UK are expected to rise sharply in January, with typical annual bills forecasted to increase by £276. This represents a 16% hike, the largest rise seen in four years, and will impact millions of homes during the coldest period of the year, according to data obtained by the BBC. The consultancy Cornwall Insight provided this forecast just one day before Ofgem’s price cap adjusts in October, intensifying calls for government intervention to support vulnerable households.
Currently, around 20 million households across England, Scotland, and Wales are on variable tariffs governed by Ofgem’s price cap, which limits the maximum price per unit of gas and electricity. On Thursday, these households will experience a 4% price increase, roughly equating to an extra £60 annually, or £5 monthly. This would take an average annual energy bill to about £1,723 for dual-fuel customers paying by direct debit, assuming prices remain constant over the year. The government’s VAT cut on energy bills, which reduces costs by about £45 per year, has softened this rise, but projections for January indicate a more substantial leap to nearly £2,000 annually.
Craig Lowrey, principal consultant at Cornwall Insight, noted that the timing of this price surge is particularly challenging. He highlighted January as “already a difficult month” due to cold weather and post-holiday financial strain. The forecasted increase is largely driven by disrupted gas supplies linked to the conflict in the Middle East and diminished gas storage levels across Europe. Cornwall Insight warns that rebuilding these reserves could keep energy costs high “well beyond the winter.” Although the January price cap won’t be officially announced until late November, Lowrey described a substantial increase as “all but certain,” given current global energy market conditions.
The strain of rising living costs is already evident for many people, including Aaron Richards from Maidenhead. He explained, “I try to eat less takeaways, work more overtime, and try to budget a bit better, but at the same time, we shouldn’t have to.” Aaron also faces soaring fuel expenses for his diesel car, adding to his financial pressures. Highlighting the wider hardship, he said, “I know people who can’t afford to heat their house and they’re struggling at the moment. Housing and eating are two of life’s essentials that everyone should have. It shouldn’t be a challenge to have any of those things.” Unpaid energy bills have accumulated to over £5 billion, and with growing debt levels, organizations like National Energy Action stress the urgent need for targeted government support and debt relief schemes.
EDF Energy’s chief executive, Simone Rossi, has joined calls for more assistance, warning the UK is “walking into a second significant energy crisis” following one just four years ago. Speaking exclusively to the BBC, Rossi urged the government to extend the VAT reduction on electricity bills beyond its planned expiry in April, and to approve new domestic energy projects like the Jackdaw gas field and Rosebank oil field to help alleviate future supply issues. The government has affirmed its commitment to exploring ways to ease the cost-of-living pressures on UK households as the energy situation continues to develop
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