Household energy bills in Britain could rise by more than £400 in the new year as higher wholesale fuel prices put renewed pressure on consumers. According to The Independent, forecasts from EDF and Bloomberg Economics suggest annual costs could climb above £2,150, taking bills to levels not seen since June 2023.
The warnings come before Ofgem’s October price cap takes effect, raising the average household bill to £1,723. That represents a £60, or 4%, increase from the current rate. Pressure on fuel markets has intensified amid conflict in the Middle East, while the effective closure of the Strait of Hormuz has contributed to rising prices.
Forecasts Point to a Sharp Rise in Household Costs
An independent forecast from EDF estimates that the average energy bill could increase by 30% to £2,165 in the new year. According to The Independent, that would represent a £442 increase from the October price-cap level, equivalent to about £36 more each month for an average household.
Bloomberg Economics issued a separate forecast during the same week, estimating a 25% increase to £2,150 for the January-to-March period. Under either forecast, household energy costs would reach their highest level since June 2023.
An earlier estimate from energy consultancy Cornwall Insight was lower. In August, the firm predicted that January’s price cap would be set at £1,872, an increase of £149. Wholesale prices have risen since that forecast was published, and Cornwall Insight is expected to issue a new estimate later in September.
The price cap limits how much energy suppliers can charge per unit to customers on standard variable tariffs, which cover most households. The annual figure published alongside the cap reflects consumption by an average home rather than setting a maximum amount that any household can pay.
Ofgem has also changed the methodology used to calculate the cap as average consumption levels have shifted. Using the regulator’s methodology from before October 2023, EDF’s £2,165 forecast would be equivalent to £2,425 a year. That figure is close to the £2,500 level at which the government intervened following the energy price shock associated with Russia’s invasion of Ukraine in 2022.
Higher Bills Could Offset Recent Government Measures
The prospect of another increase comes after measures intended to reduce household energy costs. Prime Minister Andy Burnham announced a temporary VAT cut on energy bills, which is expected to save an average household £45 a year from October.
That followed a measure announced by former chancellor Rachel Reeves in 2025 to remove two energy-efficiency schemes, cutting £150 from the average bill. According to The Independent, an increase of more than £200 in January would effectively cancel out those reductions, although bills would remain lower than without the policies.
Higher energy prices could also add to inflation. CPI reached 3.1% in August, with official figures showing that rising fuel costs were a major contributor. The reported scenario of higher energy bills could push the headline inflation rate above 4%.
Chancellor John Healey is due to present his first Budget at the end of October, when further measures on energy bills and living costs are expected. A government spokesperson said the chancellor was focused on easing pressure on families and businesses, pointing to the removal of VAT from electricity bills and measures intended to reduce electricity costs by up to 25% for more than 10,000 manufacturing businesses.
