ENERGY regulator Ofgem is to blame for part of a massive increase in energy bills as the price cap is set to hit more than £4200, experts have said.
In a new dire outlook for households, Cornwall Insight said bills are set to soar to around £3582 in October, from £1971 today, before rising even further in the new year.
Ofgem is set to put the price cap at £4266 for the average household in the three months from the beginning of January.
The energy consultancy said this is around £650 more than its previous forecast.
It comes after Ofgem last week announced changes to the way in which it calculates the price cap on energy bills.
Craig Lowrey, principal consultant at Cornwall Insight, 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.
“Many may consider the changes made by Ofgem to the hedging formula, which have contributed to the predicted increase in bills, to be unwise at a time when so many people are already struggling.”
However, he argued that Ofgem’s decision will hopefully lead to lower bills in the second half of next year. With new rules making it easier for suppliers to recover their costs, fewer suppliers will fail and those costs won't be passed onto consumers, he said.
Part of the increase in the forecast is also due to rising wholesale energy prices, Cornwall said.
The price cap forecasts from Cornwall show bills reaching £4427 in April, before finally dropping slightly to £3810 from July and £3781 from October next year.
Dr Lowrey said the UK Government must take action to step in and protect households from the runaway costs.
The Government has already promised £400 to every household, and extra help for the more vulnerable.
“If the £400 was not enough to make a dent in the impact of our previous forecast, it most certainly is not enough now,” Dr Lowrey said.
His comments were echoed by Money Saving Expert’s Martin Lewis (above), who said in a thread on Twitter that the change “will leave many destitute”.
He said recent promises from Conservative leadership candidates to cut green levies will not be enough.
“The leadership debate must not ignore this portentous national cataclysm any more,” Lewis said.
“They are all in the same party; let’s call on them to come together for the good of the nation rather than personal point-scoring.”
