Energy UK has called on the government to take urgent action to support families struggling with rising energy costs this winter. The trade association warned that a failure to intervene will likely trigger a deeper, longer-term financial crisis, exacerbated by recent increases in domestic gas prices and projections of significant hikes in January.
Current estimates indicate that roughly 20 million households on variable tariffs, governed by the Ofgem price cap, face a potential 16% increase in energy costs early next year. This follows a 4% rise implemented at the start of October across England, Scotland, and Wales. For a typical household paying by direct debit, this latest adjustment adds approximately £5 per month to bills, bringing the projected annual cost to £1,723. Projections from the consultancy Cornwall Insight suggest that this figure could climb further to £1,999 in January. Figures revealed by earlier this week showed forecasters predicting a 16% rise in domestic energy prices in the new year for 20 million households on variable tariffs affected by regulator Ofgem’s price cap. But forecasts show a far greater increase is possible for bills in January.
Addressing the concern, Prime Minister Andy Burnham stated that the administration is actively evaluating measures to alleviate the mounting pressure on consumers. While Energy UK acknowledged previous government efforts—including the cancellation of certain levies and a reduction in VAT on electricity—the organization argued that these benefits have been neutralized by elevated wholesale market costs.
According to the industry body, these wholesale price spikes are largely driven by international instability, specifically ongoing conflict in the Middle East and shipping disruptions through the Strait of Hormuz. These factors mirror the market volatility of 2022, when energy costs surged following Russia’s invasion of Ukraine. Dhara Vyas, chief executive of Energy UK, emphasized the necessity of learning from that period, stating that the nation cannot afford to wait for a full-scale crisis before providing further aid.
The urgency of the situation is compounded by rising levels of consumer debt. Energy UK reported that the financial burden of this debt is now adding an average of £67 annually to every household’s energy bill, highlighting the need for immediate, targeted intervention to stabilize the sector.
