Millions of struggling households have been warned that today's increase in energy tariffs will not be the last, as bills are set to rise again in April. Average energy bills are around £700 a year above where they were in winter 2020/21 and they are due to rise by 1.3 percent today taking the average annual bill - based on typical use - to £1,738.
Tariffs were initially predicted to rise by another 1 percent from April 1, however a new analysis from experts at Cornwall Insight puts the increase at 3 percent. The combined effect of these two rises would be to add around £70 to the typical annual bill, taking it up to around £1,785.
Any increase in bills will be a blow to families, businesses and the wider economy given that the UK already has the highest electricity prices in the world. It will also be a blow for the new Labour government which pledged to bring down the nation's energy bills through a switch to 'green' energy from wind, solar and, potentially, new nuclear plants.
Russia's invasion of Ukraine continues to add a price premium to the cost of energy. Supplies of Russian gas to Europe have been blocked making the UK more reliant on expensive imports of Liquefied Natural Gas (LNG) from the USA and the Middle East.
At the same time, the UK energy regulator, Ofgem, which sets the price cap is actively limiting competition among energy retailers to offer cheap deals in order to maintain stability in the market.
Dr Craig Lowrey, Principal Consultant at Cornwall Insight, said: "The news of a rise in our forecast will be disappointing to households. However, the turbulence in wholesale markets - a level of volatility we haven't seen for months - reminds us to remain cautious of predictions, which could very well increase or decrease several times before the April cap is set.
"With a Trump presidency on the horizon, and an uncertain geopolitical situation in the Ukraine and the Middle East, wholesale market volatility looks set to remain."
Three quarters (74 percent) of the public are worried about the global insecurity of energy prices over the next five years, according to new research for the Warm This Winter campaign. The figures found that two-thirds (67 percent) of the country are concerned about the impact of the UK's reliance on oil and gas, while over half (53 percent) are worried that the country will not build renewables fast enough over the next five years.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said: "Millions of people are living in cold damp homes, unable to heat their homes to a safe temperature or racking up massive debts - with some even turning to loan sharks. To add insult to injury, around a quarter of what is spent on heating our draughty properties is wasted, because the UK's old housing stock is some of the worst insulated in Europe.
"The UK government needs to ensure that those suffering now are not abandoned. This means more support for households through a social tariff and delivering on its promise to help people to insulate their homes."
Warm This Winter spokesperson, Caroline Simpson, said: "As the latest price cap rise means energy bills will be 67 percent above what they were in winter 2020/21 we need long term solutions.
"A comprehensive insulation programme is the quickest and easiest way to bring down bills permanently because in real terms the average household is paying more than £700 extra to use similar levels of energy as a few winters ago. We have 8.8 million adults living in cold damp homes, exposed to the health complications that come from living in fuel poverty and while we welcome recent initiatives from Ofgem, insulation and ramping up renewables to get us off volatile oil and gas for good, is what we need.
"That has overwhelming support from people in the UK with eight in 10 backing an increase in the construction of offshore wind turbines and solar panel farms and three quarters (74 percent) supporting onshore wind farms. We urge the Government to get on with the job they have started on that road to permanently lowering bills for all."
Elise Melville, energy expert at Uswitch.com, said households can protect themselves by shopping around for cheaper fixed rate deals.
"Right now, there are a range of fixed deals available which offer significant savings versus the January price cap. The average household could save up to £148 per year against the current price cap by switching to a 12-month fixed deal. Anyone who is worried about paying their energy bill should contact their supplier, who may be able to offer support."
Currently, the cheaper 12-month fix is Outfox the Market's The Big January Sale (Jan 25) - Fix'd Dual v1.0 tariff, costing £1,590 a year for typical consumption. Energy minister Miatta Fahnbulleh said: "The rise in the energy price cap will be a concern for families and households struggling with the cost of living, which is why we are doing everything we can to support people.
"We are driving the uptake of Pension Credit, and have worked with industry to deliver over £500m in support this winter, in addition to our Warm Home Discount - which is expected to support 3m eligible households. As long as Britain remains exposed to the rollercoaster of global fossil fuel markets, we will be vulnerable to energy price rises over which we have no control.
"The Government's clean energy mission is the route to protecting consumers and bringing down bills for good, which is why this government is delivering a new era of clean electricity for our country."
An Ofgem spokesman said: "We don't comment on future price cap predictions. We know many households continue to struggle with bills after the events of the energy crisis, which is why we've taken steps such as making prepayment the cheapest way to pay for energy and ensuring additional support credit is available as a last resort for customers at risk of going off-supply.
"We continue to work closely with the Government to create a fairer energy system. Earlier this month we set out a series of proposals to make sure the market is working in consumers' interests including options to address debt built up during the energy crisis and standardising support for people struggling with energy bills."