Nine million homes will see their energy bills rise today as the latest price cap set by Ofgem kicks in.
The hike takes hold as the UK prepares for its latest big freeze as a giant 720-mile wall of snow is to hit as far south as Devon in the New Year.
UK weather maps from WXCharts have turned various shades of people indicating that snow is on its way in the very near future.
The average energy bill for a home in England, Scotland and Wales will rise 1.2% from Wednesday – New Year’s Day – to £1,738 a year following the energy regulator’s gas and electricity hike.
But one expert, Cornwall Insight, predicted further misery for households in April when the next price cap is set. The independent energy analyst expects the cap to rise to £1,785 within 12 weeks.
The price cap applies to households who pay for their electricity and gas by either, standard credit (payment made when you get your electricity and gas bill), Direct Debit, a prepayment meter or an Economy 7 (E7) meter.
The four million households who pay for energy via pre-payment meters (PPMs) are expected to struggle the most financially as high prices and the concentration of energy use in the winter months mean most households with a PPM will need to spend more than 30% of their income on energy costs during the winter months.
The Resolution Foundation has warned that many of these households will fall further into debt as they often on a PPM because they were in debt to their energy supplier.
Cornwall Insight expects the cap to rise to £1,785 a year for a typical dual fuel consumer, nearly a 3% increase on today’s cap of £1,738 a year when it is next set in April.
Dr Craig Lowrey, principal consultant at Cornwall Insight, said early December saw a slight dip in wholesale energy prices, driven by easing supply tensions in Europe.
He said: “However, geopolitical instability saw prices rebound in the second half of December, with the market surging last week due to new uncertainty over the Ukraine transit deal and the higher level of withdrawals from EU gas storage facilities.
“The news of a rise in our forecast will be disappointing to households’ who will no doubt have been hoping for relief from recent cap rises. 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.”
He added: “LNG export plans under a second Trump presidency, mean we are expecting that our cap forecasts will continue to display a high degree of variability.”
On top of the wholesale market developments, Ofgem is set to make changes that could impact consumer bills.
“Looking further ahead we are currently expecting July’s price cap to fall from April’s cap, with October expected to see rises again. The April cap is due to be announced near the end of February,” added Mr Lowrey.
