Energy bills could rocket to average of £3,300 within months, experts warn

The energy price cap could soar to more than £3,300 a year, higher than previous estimates, an expert has warned.

The latest analysis from Cornwall Insight said their latest forecast predicted the price cap for the first quarter of 2023 could rise to £3,363 a year for an average domestic consumer, increasing significantly from the £3,003 figure they released two weeks ago.

They said the rise was caused by the "ongoing uncertainty regarding Russian gas flows into continental Europe."

They also said potential strike action by Norwegian gas workers also impacted their calculation.

The next price cap announcement by Ofgem will be revealed next month and will cover the last quarter of 2022.

Read more: Martin Lewis reveals the fixed rate tariffs that could save you money on your energy bill

Many had hoped that the soaring energy prices would only last until the end of this year, but Cornwall Insight now believes the worst could come during the height of winter at the start of next year.

Dr Craig Lowrey, Principal Consultant at Cornwall Insight said: "As it stands, energy consumers are facing the prospect of a very expensive winter."

If the prediction turns out to be true then it would be a blow to millions who are already suffering from the surge in prices.

Cornwall Insight's prediction does not cover the support provided by the government's cost of living support policies.

Dr Lowrey said: "As the energy market continues to grapple with global political and economic uncertainty, the corresponding high wholesale prices, and the UK’s continued reliance on energy imports has once again seen predictions for the domestic consumer Default Tariff Cap rise to what are even more unaffordable levels."

Cornwall Insight is a global research and analysis company focusing on energy markets.

Ofgem has said they believe the next energy price cap increase will raise bills to £2,800 a year.

Read more: Cost-of-living crisis weighing on retail sales

They are currently £1,971, which was a 54% increase from the previous level.

In comparison, the energy price cap for last winter was £1,277 meaning if the analyst's predictions are correct the price of energy will have nearly tripled in a year.

Ex-Chancellor Rishi Sunak announced in May most households in the UK will be able to claim £550 in support to help pay for their energy bills, with those most in need eligible to claim more.

The support for those most in need costs billions of pounds, but the impact of the cost of living crisis is also impacting how much the government can spend.

With a recession now likely and inflation hovering near 10% making debt more expensive, whoever the new prime minister is could face a lot of difficult decision.

The Office for Budget Responsibility (OBR) warned on Thursday the government is currently on an "unsustainable path" and may be forced to increase taxes or cut spending.

The OBR said the UK Government has already spent as much this year – 1.25% of gross domestic product (GDP) – to help households cope with the cost squeeze as it did supporting the economy through the financial crisis.

In its fiscal risks and sustainability report, the OBR predicts that debt could rise from 96% currently to more than 100% of GDP by 2052-53 and reach 267% of GDP in 50 years if upward pressures on health, pensions and social care spending, and the loss of motoring taxes, are factored in.

With Boris Johnson's resignation, many are fearful there will be a power vacuum in Westminster as the cost of living crisis carries on.

Johnson has said he will remain in place until a new leader is elected but won't make any major decisions.

A new prime minister might not be in place until October.

Money Saving Expert Martin Lewis called on the Tory Party to speed up the process of replacing their leader to allow the government to tackle the escalating cost-of-living crisis.

He said: "We need a working administration at speed.

"This winter will be catastrophic, pushing millions into poverty with typical energy bills rising to £3,000 a year. We need leaders in office taking action asap."