UK energy bills could approach £2,000 as suppliers press for winter help

Household energy debt is already adding an average of £67 a year to everyone’s bills, according to suppliers’ trade body Energy UK. Now, with another sharp price increase forecast for January, the group is urging the government to help struggling households before winter pressures turn into a deeper and more expensive crisis, BBC Business (direct) reported.

The warning comes just after households in England, Scotland and Wales faced a 4% increase at the start of October. That added the equivalent of about £60 a year, or £5 a month, to a typical dual-fuel bill paid by direct debit. At that price level, a household using a typical amount of gas and electricity would pay £1,723 over a full year.

January could bring a much bigger hit. Forecasts reported by the BBC point to a 16% increase in domestic energy prices for 20 million households on variable tariffs—plans whose prices can change. Consultancy Cornwall Insight’s latest estimate puts the typical annual bill at £1,999. These households are covered by regulator Ofgem’s price cap, which limits the price charged for each unit of gas and electricity rather than fixing a household’s total bill.

Earlier relief meets higher wholesale costs

Energy UK acknowledged that the government had already taken steps to ease the burden. VAT, a consumption tax, was reduced on electricity bills on Thursday, while some levies—additional charges on bills—were scrapped or moved into general taxation earlier this year. But the group said higher wholesale prices, the costs suppliers pay for energy, had wiped out those savings.

The trade body linked those wholesale pressures partly to conflict in the Middle East and disruption to shipping through the Strait of Hormuz. It compared the rise in bills with the surge in 2022 following Russia’s invasion of Ukraine. Its argument is that waiting for the strain to reach a similar scale would leave households facing a longer and more costly crisis.

Dhara Vyas, Energy UK’s chief executive, said mounting customer debt made early intervention urgent. She also warned that support assembled at the last moment could miss the households that need it most and increase the overall cost. On Thursday, EDF Energy chief Simone Rossi separately warned that the UK was heading towards another energy crisis.

“Last-minute emergency interventions run the risk of being badly targeted and costing us all more,” said Energy UK chief executive Dhara Vyas.

Suppliers seek targeted support and debt relief

Energy UK wants help beyond the £150 Warm Home Discount available to people on benefits, eventually leading to a social tariff—a discounted energy rate for eligible households. It also called for debt relief for the worst-affected customers, alongside measures to prevent arrears building up among new tenants and homeowners. A further proposal would move more levies from electricity bills into taxation as part of a broader shift towards electricity use.

At the Labour Party conference last week, Prime Minister Andy Burnham told the BBC that he did not consider Rossi’s crisis warning an overstatement. He said home energy costs, alongside petrol and diesel prices, were very difficult and that the government was considering measures to ease the pressure. The next test is whether further help arrives before January, and how the eventual price-cap level compares with forecasts now pointing towards a typical annual bill of almost £2,000.