Gas and electricity bills ‘to hit £5,300 by April’ as Octopus Energy boss calls for price cap freeze


Gas and electricity bills are expected to hit £5,300 when next April’s price cap is announced, piling further misery onto Britons as inflation keeps climbing.

A forecast by energy consultancy firm Cornwall Insight has said bills could be capped at £5,341.08  four months into next year, while the figure for January’s cap is expected to be £4,649.72.

However, the price cap forecast for October this year is £3,583 for the average household, an 80 per cent rise on the current cap of £1,971. 

The firm has said it is ‘difficult to see how many will cope’ this winter, with the final figure for the October price cap to be announced by energy regulator Ofgem on Friday. 

It comes as the boss of Octopus Energy has called on the price cap to be frozen as its current level and asked for government intervention as there are ‘systematic issues’ in the energy network. 

Greg Jackson, who founded the firm  which supplied energy to more than 2million customers, said if the price of beer had risen at the same rate as energy, a pint would cost £25.

He made the statement the same day one forecast predicted inflation will breach 18 per cent in the new year – the highest level in nearly half a century – caused by skyrocketing energy bills.

Experts at financial firm Citi have said the Consumer Price Index (CPI) inflation – which indicates the increase in the amount people pay for goods and services – will hit 18.6 per cent in January.

Meanwhile, it emerged that homeowners could get paid to turn off power-hungry appliances such as washing machines, tumble dryers and games consoles during peak times under a new scheme.

The National Grid is reportedly considering giving money to people who cut back on their energy between 5pm and 8pm in the form of rebates.

Energy bills are expected to reach more than £5,000 when next April's price cap is announced. According to the latest forecast from energy consultancy Cornwall Insight, bills could be £5,341.08 by next April. The figure for January's cap is expected to be £4,649.72

Energy bills are expected to reach more than £5,000 when next April’s price cap is announced. According to the latest forecast from energy consultancy Cornwall Insight, bills could be £5,341.08 by next April. The figure for January’s cap is expected to be £4,649.72

The forecast is the final one before regulator Ofgem announces the new price cap on Friday, which will come into effect on October 1 and last until the end of the year

 The forecast is the final one before regulator Ofgem announces the new price cap on Friday, which will come into effect on October 1 and last until the end of the year

There are concerns how millions of households in the UK will be able to afford their energy bills this winter – between October and April the average household will pay an equivalent £4,102 per year for their gas and electricity.

The price cap, which is now being raised quarterly instead of every six months previously, would see a massive jump from today’s £1,971, which is already a record, and much higher than the £1,138 seen last winter.

Cornwall Insight said today: ‘While the energy price cap rise in April was already an unprecedent increase in domestic consumer energy bills, our final predictions for October are truly concerning,’ Cornwall Insight said.

‘With the cost of living spiralling and households looking at an energy bill rise of over £1,500 equivalent per year, it is difficult to see how many will cope with the coming winter.’

First Australian gas shipment to Europe in more than five years is set to arrive in Kent on Monday 

The first Australian gas shipment to Europe in more than half a decade is set to dock in the south of England on Monday, as gas shortages bite across the continent.

The Attalos gas tanker is set to pull into the Isle of Grain terminal in Kent, by the mouth of the Thames during the day.

It brings a rare cargo of liquified natural gas (LNG) from Australia to Europe, the first in six years, according to data from Bloomberg.

Some of the gas is likely to be used in the UK straight away, but much of it will probably flow to Europe through the pipelines that connect Britain to the continent.

There it might be channelled into European gas storage sites and some of it could return to Britain during winter.

The UK has some of the highest LNG import capacity in Europe, but it has very little gas storage.

Therefore, much of the LNG that comes to Europe this summer will arrive in British ports, but be shipped over to European storage sites.

The Attalos departed Malaysia on July 20, according to data from Vessel Finder.

Here it had picked up a shipment of gas that had come from Australia.

Because of the long distances involved, it is rare for Australian gas to find its way to Europe.

Most instead goes to countries in Asia.

But the deep gas crisis that Europe is currently facing has catapulted the need for new sources of the fossil fuel.

Gas prices have soared manifold in the last year, and the UK price for delivery next month was up another 17% on Monday morning, hitting £5.40p per therm.

At the weekend experts predicted that the average household energy bill is likely to soar to more than £6,000 per year from next April.

It is a dire warning for struggling households, and Monday’s gas price hike will only add to these woes.

Speaking on Radio 4’s Today programme on Monday, Octopus Energy chief executive Greg Jackson said that if the price of beer had risen as much as gas prices, getting a pint would cost £25.

‘People don’t know what a therm is, but, underneath it, the price per therm has gone from 60p to around £5 at the moment and that’s what’s passing through to customers if we don’t do something,’ he said.

He added: ‘There are systemic issues.

‘There are loads of questions of how we pay for this.

‘One thing we can’t do is be expected to pass those costs on to consumers.’

Soaring gas prices are also adding to the bill that will be hitting households to prop up failed energy supplier Bulb.

According to new research by Auxilione, an energy consultancy, and shared with the Financial Times this weekend, the cost of bailing out Bulb might cost £4 billion by this spring.

Ministers stepped in to rescue Bulb as it was considered too big to fail.

Many of its rivals had gone out of business.

 

The new warnings will concern ministers as they meet energy bosses later this week.

Chancellor Nadhim Zahawi is holding a series of meetings this week to follow up on earlier discussions with energy generation companies.

Denmark’s Orsted, nuclear company Newcleo, and German giant RWE are all meeting the Chancellor this week, and will be asked what they can do to help consumers with rising energy prices.

October’s price cap forecast breaks down as predicting that the ceiling for electricity bills will be £1,679.35, whilst the limit for gas will be £1,874.40.

In January, the breakdown could be £2,212,32 for electricity and £2,437.39 for gas. In April, the bills could climb further to £2,365.38 for electricity and £2,975.70 for gas. 

In July next year, the cap is predicted to fall to £4,767.97, with a £2,052.70 limit for electricity and a £2,715.27 ceiling for gas. 

By October next year, the figure could climb again to £4,807.11, with £2,110.70 for electricity and £2,696.41. 

Octopus Energy’s Mr Jackson, who is calling for Government intervention ahead of further price cap rises, told BBC Radio 4’s Today programme: ‘I think the spate of failures within the 29 companies that went bust last year, that was driven by gas prices roughly doubling. They’re currently nine to 11 times higher than usual.

‘Look, to put that in perspective, if this was beer, we’re talking about the wholesale price being £25 a pint.

‘People don’t know what a therm is, but, underneath it, the price per therm has gone from 60p to around £5 at the moment and that’s what’s passing through to customers if we don’t do something.’

He added: ‘There are systemic issues. There are loads of questions of how we pay for this. One thing we can’t do is be expected to pass those costs on to consumers.’

Last month, CPI inflation struck a new 40-year-high of 10.1 per cent.

The Bank of England has previously projected that inflation will peak above 13 per cent in October before declining.

However, Citi analyst Ben Nabarro has forecast that inflation will jump to 14.8 per cent in October as energy bills spike for UK households.

He projected that inflation will accelerate following last week’s 25 per cent rise in UK gas prices and 7 per cent rise in UK electricity prices.

Citi said it expects the October energy price cap to reach £3,717, slightly higher than previous estimates.

A further increase in energy bills in January – with projections the cap will hit £4,567 – will push inflation towards the new peak, it said.

It predicted that the price cap will surge to £5,816 in April.

The new forecasts predict that inflation will stay in double figures for the next 12 months and will finally dip back below the Bank of England target rate of 2 per cent by April 2024.

Mr Nabarro said: ‘Even with the economy softening, last week’s data re-affirmed the continued risk of pass through from headline inflation into wage and domestic price setting could accelerate.

‘With inflation now set to peak substantially higher than the 13 per cent forecast in August, we expect the Bank of England’s Monetary Policy Committee (MPC) will conclude the risks surrounding more persistent inflation have intensified.’

Interest rates increased to 1.75 per cent earlier this month but the economist warned that it could need to rise as high as 7% if ‘signs of embedded inflation emerge’.

It comes after the National Grid, which manages the infrastructure of Britain’s gas and electricity networks, is believed to have applied to energy regulator Ofgem for permission to roll out a scheme that would see homeowners paid for turning off appliances. 

If approved it could see people given a rebate of as much as £6 per kWh to households that cut their usage – with this coming into effect by late October.

There are fears the country’s energy network could become overstretched in the autumn and winter, with reports earlier this month the government is preparing for blackouts in a worst-case scenario in January.

There are fears the further increase in household bills will drive millions of households into fuel poverty as the cost-of-living crisis squeezes people’s finances.

The Express reports that a source with knowledge of the new scheme had said it was ‘not about people sitting in the dark’ or deliberately going cold this winter. 

They added: ‘It is about doing the washing at a different time of day that sort of stuff.’

A similar scheme was tested by Octopus Energy earlier this year, where it asked customers to turn down their appliances for a period of two hours on eight separate occasions in February and March.

The supplier gave those who complied were given 22.7p for every kWh of energy saved.

Energy bills are set to keep rising into the autumn and winter as the price cap is moved by Ofgem

Energy bills are set to keep rising into the autumn and winter as the price cap is moved by Ofgem

Washing machines are among the most power-hungry appliances in your home. People are set to be given rebates if they cut back on their energy-use during peak times this winter

Washing machines are among the most power-hungry appliances in your home. People are set to be given rebates if they cut back on their energy-use during peak times this winter

Tumble dryers, along with washing machines and dishwashers, account for 14 per cent of the typical energy bill, according to the Energy Savings Trust

Tumble dryers, along with washing machines and dishwashers, account for 14 per cent of the typical energy bill, according to the Energy Savings Trust

Games consoles are some of the most power-hungry appliances, and often use energy while on standby mode

Games consoles are some of the most power-hungry appliances, and often use energy while on standby mode

The National Grid could give rebates if people use less energy during peak times between 5pm and 8pm. this chart shows average energy usage throughout the day during different parts of the year, with consumption peaking between 5pm and 6pm

The National Grid could give rebates if people use less energy during peak times between 5pm and 8pm. this chart shows average energy usage throughout the day during different parts of the year, with consumption peaking between 5pm and 6pm

A National Grid ESO spokesman said: ‘We are developing a new service that will be available for consumers to benefit from across this winter and will be announcing further information soon.’

It comes as people find their wallets increasingly squeezed by price increases in most areas of their lives, with energy bills, food prices and the cost of fuel all rising in recent months.

The UK is currently seeing the highest inflation for 40 years, driven by a surge in the wholesale price of gas and oil, something which has seen oil companies return record profits.

This has in part been driven by the war in Ukraine, which has seen supplies from Russia and eastern Europe slow to a trickle.

This has led energy suppliers having to pay more and they have passed cost this onto consumers after Ofgem, the energy regulator, chose to raise the price cap which limits how much they are allowed to charge.

There was outcry when it was announced the price cap would rise by around £700 in April this year and since then the anger has only continued to rise, with predictions it could reach £4,200 in January 2023. 

Increased energy bills have contributed to rampant inflation, as companies selling goods and providing services try to make up for increased utility bills by increasing their own prices.

Retailers have also been hit by the record fuel prices, which has driven up the price of transporting and importing goods, another cost that is being passed onto customers. 

A breakdown showing how price increases across certain sectors is contributing to inflation

A breakdown showing how price increases across certain sectors is contributing to inflation

The big five oil companies - Shell, BP, Chevron, Exxon and TotalEnergies - returned record profits this year

The big five oil companies – Shell, BP, Chevron, Exxon and TotalEnergies – returned record profits this year

Earlier this year it was revealed that consumers are wasting nearly £150 a year on average by keeping ‘vampire devices’ on standby.

Research by British Gas found that the country spends £2.2billion a year by keeping microwaves, televisions and games consoles on when they’re not being used.

These appliances use energy even while on standby – with televisions and set-top boxes from providers such as Sky or Virgin Media the worst offenders, costing £24.61 and £23.10 a year.

Other devices with high annual standby costs include microwaves (£16.37), games consoles (£12.17) and computers (£11.22). Other appliances that drain energy in the background include showers (£9.80), washing machines (£4.73) and printers (£3.81).

In the coming months the cost of these ‘vampire devices’ could increase in line with gas and electricity bills, as the price cap gets set to rise to £4,200 in January – more than three times as much as at the beginning of this year.

Experts have recommended that homeowners invest in smart plugs to ensure everything is turned off via their mobile phone, or connecting devices to an extension lead that can be switched off overnight.

Some of the household appliances that add the most to your energy bills by using power while on standby

Some of the household appliances that add the most to your energy bills by using power while on standby

British Gas energy expert Marc Robson said today: ‘With household costs on the rise, there are some actions we can take to reduce our energy usage at home which will really help the bank balance and the environment.

‘Almost a third of total heating costs in the home are wasted through the roof and the walls and with vampire appliances, this figure is almost half of our electricity bills on wasted energy.

‘Just switching some of these off can really help save straight away and those with a smart meter will be able to see the impact of this in real time. Turn it down or turn it off is a great motto for fighting the vampires.’

What is the ‘cap’ and how does it work? 

What is the energy price cap?

Introduced in 2019, it’s a way of limiting what consumers pay to energy firms. Until last April it stood at £1,277, and then it was hiked 54 per cent to £1,971 for the average user. Crucially, the cap does not cover businesses, which face the full brunt of increases.

What’s happening this week?

The next rise will be announced on Friday, and the cap is expected to go up to £3,576. New rules mean it will be updated every three months from October and it is predicted to go up again in January, to £4,799.

What’s it looking like for April?

Industry experts predict it will be more than £6,000 – that means in the space of a year, the average bill is up around five-fold.

What is the Government doing about it?

The Government has promised £400 discount for every household over the winter, plus an extra £650 for hard-up families and cash for pensioners.

But that won’t be enough?

No. That package was announced when the cap was predicted to be lower – at £2,800, some £700 lower than it will be from October.

So what will the new PM do?

Liz Truss has so far said little other than suggesting she will axe the green levy, saving bill payers around £150, but Kwasi Kwarteng, likely to be Chancellor in a Truss government, tells the MoS that ‘help is on its way’. Rishi Sunak has said he will find up to £10 billion to soften the impact for up to 16 million vulnerable people.

Critics say more will be needed, with more targeted help required for those on low incomes.

What do they do elsewhere?

France has forced state-owned EDF to limit price rises to four per cent. Holland is offering some households €800 (£680) off, plus cutting VAT. Germany is giving €300 (£250) off, plus a further €100 (£85) per child. Italy will give families €200 (£170).



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