Millions of households face a greater than expected increase to their energy bills of about 5% from April after a slump in Europe’s gas storage levels caused market prices to climb, according to analysts.
The average gas and electricity bill for a typical household in Great Britain is expected to rise by £85 from April to £1,823 a year under the energy regulator’s price cap.
The prediction by the leading forecaster Cornwall Insight is above its forecast at the start of the year that annual bills would rise 2.7% to an average of £1,785 from the spring, after colder weather and limited renewables drained gas storage levels across Europe.
The latest energy price increase would mark the third consecutive quarterly rise in costs for households, in a blow to the government’s election promise to bring down energy bills by “up to £300 by 2030”. Cornwall expects the price cap to fall slightly in the summer before rising again in October.
About 9 million households that use variable tariffs linked to the price cap will see an immediate impact on their bills from April, while it will be delayed for others on fixed tariffs.
The energy regulator for Great Britain, Ofgem, will confirm the figure for the energy price cap covering the three months from 1 April on Tuesday 25 February. The regulator increased the cap in January by 1.2% to a rate equivalent to £1,738.
Adam Scorer, the chief executive of National Energy Action, a fuel poverty charity, said the third consecutive price cap rise would hit households “after three years of abnormally high energy bills”.
“There is no getting used to this new normal for the people we try to help. Millions of the most vulnerable households are struggling with debt and severely rationing their heating,” he said.
Although a further rise was widely expected, the increase is expected to be steeper than first anticipated after cold, still weather across Europe forced many countries to rely more heavily on gas power plants as wind power dwindled. As a result gas storage levels dropped across the continent, causing wholesale market prices to rise sharply.
Craig Lowrey, a principal consultant at Cornwall, said: “It might be tempting to look at rising bills and conclude that the push towards renewables is not working, and we should scale back on the transition. But the reality is higher energy costs only reinforce the need to accelerate our expansion of clean, reliable energy across the UK.”
Consumers could face even higher bills if they use more than the typical amount of energy. This is because the energy price cap, which is recalculated every three months, limits the rate energy suppliers can charge customers for each unit of gas and electricity – not the total bill.
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Ahead of the forecast, Ed Miliband, the energy secretary, wrote an urgent letter to Ofgem saying the price rise meant it must move faster to protect consumers.
He called on the watchdog’s chief executive, Jonathan Brearley, to set out faster mitigations that the regulator could take to ease the pressure of the “rollercoaster” of global gas markets, which are likely to include speeding up the rollout of renewable energy.
A government spokesperson said households and businesses would shoulder higher costs due to “Britain’s vulnerability to volatile global gas markets”.
“By failing to invest at scale over many years in the clean, secure, homegrown power our country needs, we have been left exposed to the consequences of events beyond our borders,” they said. “The only way to bring down bills for good is by making Britain a clean energy superpower, which will ensure our energy security, protect consumers, create jobs and tackle the climate crisis.”
