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Expected January rise could hit millions of households

Energy bills could climb sharply in the UK in January, with the typical annual household bill forecast to rise by £276 to £1,999. According to calculations shared by consultancy Cornwall Insight with the BBC, that would amount to a 16% increase and the steepest rise in four years. The increase is expected to put pressure on millions of customers on variable tariffs during the coldest part of the year.

Under the Ofgem price cap, around 20 million households in England, Scotland and Wales are already facing a 4% increase under the October update that took effect on Thursday. For a typical household paying by direct debit and using both gas and electricity, the annual bill will reach £1,723 if prices stay at this level for a year. It is also noted that the rise would be even higher without the government’s VAT cut on electricity, which is estimated to save the typical bill about £45 a year.

Gas supply and low stocks are driving price pressure

Cornwall Insight links the jump in its January forecast to the conflict in the Middle East disrupting gas supplies and storage levels remaining low across Europe. The company says the need to replenish stocks over the winter could keep energy costs elevated not only during the colder months but for longer. Although the regulator will not announce the January price cap until the end of November, half of the pricing period has already passed, limiting the chance of a downward adjustment.

What do the key figures show?

  • Forecast January increase: 16%
  • Typical annual bill forecast: £1,999
  • Annual level after October update: £1,723
  • Households on variable tariffs: around 20 million

Rising debt adds pressure on the government and suppliers

Recent Ofgem data show that the total unpaid bill and fee debt customers owe energy suppliers has exceeded £5 billion. This reflects not only the strain on household budgets, but also the impact on the functioning of the energy market because of collection risks. A debt relief plan is on the regulator’s agenda, while campaign groups are calling for it to be implemented quickly with public support.

EDF Energy chief executive Simone Rossi was among those urging the government to provide additional support. Rossi called for the electricity VAT cut, which is due to expire in April, to be extended so that it does not push bills back up, and also backed approval for the Jackdaw gas field off Aberdeen and the Rosebank oil field off Shetland. The government says it is considering steps to ease pressure on bill payers amid the cost-of-living squeeze.

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