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UK households face second record energy bill rise

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Millions of households could face a second record jump in energy bills next spring, on top of the £139 increase due next month, as the global gas crisis continues to drive market prices to new highs.

An even larger energy bill rise is expected from next April after the steady increase in gas and electricity market prices, which could add between £178 and £294 to the typical price of a default dual-fuel energy deal.

Craig Lowrey, a senior consultant at the energy advisory Cornwall Insight, said the most recent record energy market prices would feed through to the government’s energy price cap for next summer to drive bills up by a further 14% to £1,455 a year for a typical dual-fuel customer.

A graphic showing default price tariff caps between 2018 and 2021

“We would need to see a material and sustained reduction in the wholesale market to avoid the kind of cap levels we are predicting for that period,” he said.

Separate analysis by BFY consultants for Energy Helpline, a switching site, has predicted that the price cap could increase by up to £294, bringing the total level of the price cap to £1,571.

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A map showing active, planned and damaged energy interconnectors between the UK and other parts of Europe

In either scenario the energy price cap would exceed the average dual-fuel energy bill over the last 10 years, which ranges from a low of £1,117 a year recorded in 2017 to highs of £1,286 in 2013.

Tom Lyon, an analyst at Energy Helpline, said: “Reduced gas supply from Russia, the pandemic recovery, a shortage in renewable energy dynamics, and the recent fire at a UK electricity interconnector in Kent have created an unwanted perfect storm.”

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“For people struggling to pay their energy bills, contact your energy supplier immediately, you may be eligible for a repayment plan, payment break or support schemes such as the warm home discount or winter fuel payment,” McMillan added.

About 11m households that use a default tariff to buy gas and electricity are braced for their annual energy bills to rise to an average of £1,277 from 1 October, up by £139.

A further 4m households that use prepayment meters – which are often relied on by more socially vulnerable households – can expect their average energy bills to climb from £1,156 to £1,309, up by £153.