Energy bills set to reach £3k tripling since last summer

Forecasts are estimating the price cap will each £3,300 this winter, meaning average household bills will have tripled since last summer, according to analysis by the Energy and Climate Intelligence Unit (ECIU).

Gas prices will add £2,000 to the average bill, an over 90% increase, while the knock-on effect on the power market means gas will push electricity prices up by over £700 a year, an almost 400% increase.

Additionally, the gas crisis has added a further £100 to bills attempting to deal with the £2.7bn collapse of over 30 energy suppliers overwhelmed by rising prices, not including the £1.9bn taxpayers have to cover for Bulb Energy’s special administration.

Dr Simon Cran-McGreehin, Head of Analysis at ECIU, said: ‘With the gas price so high and volatile, and set to remain so, the question is: where’s the plan? As the Institute for Fiscal Studies has already pointed out, a £17bn winter bailout for bills isn’t sustainable for years to come. The very obvious answer is to help people to use less gas, but the government has had itself in a muddle over energy efficiency.

‘The Energy Company Obligation (ECO) insulation scheme has worked well and is knocking £600 off the bills of fuel poor households, but government is non-committal on doing more. We have to consider security of supply too, but more UK gas won’t come online anytime soon, won’t bring down bills and for many will have the whiff of ‘let them eat cake’ about it.’

Previous analysis by the ECIU has revealed that installing heat pumps and insulation was the most effective way to permanently reduce gas demand, gas imports and energy bills, while increased oil exploration will do nothing to manage demand or prices.

Energy efficiency schemes, such as the ECO scheme, have contributed to savings of £1.2bn per year under current prices, which will only rise further in winter when the price cap is raised.

The government has now secured a further 11GW of wind and solar capacity at a quarter of the price of gas power generation, including 7GW of offshore wind at record low prices of £45/MWh.

This takes the government halfway towards hitting its target of 50GW by 2030 which could bring in savings of £34bn per year or £500 per household.