Energy bills for the typical UK household are now estimated to pass £4,200 by January next year, a market researcher has said.
Cornwall Insight’s latest estimates for Scotland, England and Wales have risen by £650 just since its estimate last week – leaving average households to pay the equivalent of £4,266 per year for the three months to March 2023.
The consultancy cited rising wholesale prices, alongside a revision of the methodology used by Ofgem to calculate the price cap, as primary reasons for the higher estimate.
In Tuesday’s report, Cornwall also raised its forecast for this autumn’s domestic energy bills to £3,582 – up from its previous estimate of £3,358.
It comes amid mass uproar as energy price hikes have threatened the survival of Scotland’s small businesses while oil and gas companies have reported record high profits in the last few months.
Cornwall previously warned that businesses could see a 500% increase in their gas and electricity bills leading to many of them being forced to shut.
Dr Craig Lowrey, principal consultant at Cornwall, said: “While our price cap forecasts have been steadily rising since the Summer 2022 cap was set in April, an increase of over £650 in the January predictions comes as a fresh shock.
“The cost-of-living crisis was already top of the news agenda as more and more people face fuel poverty, this will only compound the concerns.
Raising questions about the efficacy of the price cap, Dr Lowrey stated that if it is not “controlling consumer prices, and is damaging suppliers’ business models”, then its fitness for purpose must be revisited.
He added: “It is essential that the government use our predictions to spur on a review of the support package being offered to consumers.
“If the £400 was not enough to make a dent in the impact of our previous forecast, it most certainly is not enough now.
“The government must make introducing more support over the first two quarters of 2023 a number one priority. In the longer-term, a social tariff or other support mechanism to target support at the most vulnerable in society are options that we at Cornwall Insight have proposed previously.
“Right now, the current price cap is not working for consumers, suppliers, or the economy.”