Energy bills set to stay above £2,000 due to Sunak loan scheme | Cost of living crisis

Energy bills will remain well above £2,000 for another two years, leading analysts say, who have warned that prolonged high prices threaten Chancellor Rishi Sunak’s loan scheme to help households cope exorbitant gas prices in the context of the growing cost of living crisis.

Cornwall Insights, which predicted the recent 54 per cent rise in the cap on average energy bills to £1,971, said it had raised its forecast for upcoming changes to the cap, which is determined by the electricity regulator. energy, Ofgem.

He warned higher prices for longer would undermine Sunak’s plan to ease pressure on household finances by giving bill payers a one-time £200 bill discount, repaid in £40 installments over five years .

Cornwall left its forecast for the coming winter unchanged, estimating the price cap will reach £2,607, meaning households will have seen their bills double in the space of a year. Although he expects the ceiling to fall from this record, he does not expect a significant drop anymore.

Its forecast for the winter period from 2023 is now £2,284, down from a forecast of £2,040 made at the end of March. Cornwall analysts believe the price cap will still be as high as £2,233 by spring 2024.

The change comes after gasoline prices stopped falling sharply and started to stabilize, with risk now weighted to further increases.

Craig Lowrey, the lead consultant at Cornwall Insight, has urged the government to come up with new measures to help households cope with bills and reconsider its omission of energy efficiency from Boris Johnson’s energy security strategy, unveiled the last week.

“The cheapest energy is the energy you don’t use, so to reduce consumer bills the government really needs to rethink how to support reductions in energy consumption for all consumers, including those in poverty. energy,” Lowery said.

“The exclusion of new policies important for energy efficiency in the energy security strategy was a missed opportunity. While the government has already offered some support for consumers to pay their energy bills this year, that was before forecasts started predicting further rises, and over a longer period.

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“It is possible that the government will take further action in the fall, but we have no guarantee that additional support will be provided.

“Of course, many of the variables that drive our forecast may change ahead of the capping periods for next year, but the risk is weighted by upward pressure rather than downward pressure on the price cap. price right now.

“And with the rising cost of living and inflation hitting an all-time high in March before the April 1 cap hike materializes, then even the potential for those kinds of cap levels to come in 2023 will be concerning. for hard-hit households.”

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