THE cap on energy bills might soar by several hundred pounds more than nightmare forecasts predicted earlier this week, new analysis has shown.
In a provisional forecast, experts at energy consultancy Auxilione predicted the price cap on energy bills could reach £3687 in October – close to double today’s already record levels.
In what is thought to be the worst outlook yet for the 24 million households whose bills are governed by the price cap, the experts also saw further rises in 2023.
The cap could hit around £4400 in January, they warned, although the predictions came with caveats.
Auxilione said it was double-checking its figures, due to changes made by energy regulator Ofgem to the price cap rules.
“We release today’s view with a caveat that we are having to re-do our analysis this week to double check that the outputs are correct. Be sure to be sitting down before reading on,” it said.
The price could balloon further to £4700 in April, the experts said, although they warned that forecasts so far ahead are more likely to be unreliable.
If true, it would mean a price cap more than four times higher than before the gas price crisis started last year.
Falls will not happen until July, when the price cap might dip to £4000 – but this is still double current levels.
Auxilione said the changes – which added around £400 to the January price cap compared to Friday’s forecast – were largely due to new Ofgem rules that were announced earlier this week.
“On Thursday Ofgem released their final models including some changes to allowances within the cap, such as recovering some of these over a shorter period of time,” it said.
“Having now analysed these has left us wondering if these are showing the correct outputs.
“Over the last 24 hours we have been comparing our values with other analysts who also seem to be in the same position as us – in disbelief at the values.”
It will mean serious hardship for many households struggling to keep their homes warm.
Ofgem have recently faced much criticism for passing on price increases to consumers, through implementing quarterly price cap changes.
National Energy Action director of policy and advocacy Peter Smith said: “Ofgem moving ahead now with passing price cap changes on to households quarterly rather than every six months wasn’t necessary and unfortunately means further significant price increases in January are inevitable.
“Average annual bills are already predicted to increase by £1200 a year – a 177% increase since last October. Now, householders can expect further hikes just after Christmas, in the middle of heating season when energy costs are typically at their highest.”
As households across the country choose between heating or eating, energy companies are celebrating mammoth profits – with BP revealing their second-quarter profits more than trebled to a 14-year high at $8,500,000,000 (£6.9 billion).
Meanwhile, Tory leadership frontrunner Liz Truss has stated that if she was made PM she “won’t be giving handouts” to struggling households, claiming that taxing corporations would be “completely counterproductive”.