Household energy bills are on course to soar to their highest level in three years, wiping out any savings from Andy Burnham’s VAT cut on electricity.
Average energy bills are expected to jump around 4pc from October, according to energy research group Cornwall Insight, representing a £66 increase for a typical household.
The analysts said Ofgem’s price cap – which limits the average annual energy bill faced by a family home – would rise from £1,663 to £1,729.
In its own forecasts, supplier EDF predicted a similar rise to £1,722 in October, and a further rise to £1,815 in January.
The increase will land just as Mr Burnham’s planned removal of VAT on electricity bills comes into effect.
Removing the 5pc tax saved an average household £43.33 per year. Without that cut, average bills would have risen by £110, or 7pc, to around £1,773.
The rise in energy costs will see household bills at their highest level since July 2023, in the aftermath of the gas crisis following Russia’s invasion of Ukraine.
The latest increase has been driven by the war in Iran, which has cut global oil and gas supplies and left European gas storage operators struggling to refill stocks before winter.
Craig Lowrey, a consultant at Cornwall Insight, said the increased prices would coincide with maximum winter energy demand.
He said: “This latest hike will hit struggling households especially hard. Driven by international conflict rather than domestic policy, it is a stark reminder that our energy bills remain tied to events thousands of miles away.”
He also warned that the cost of delivering net zero and a decarbonised grid by 2030 was pushing up bills, and welcomed Miatta Fahnbulleh’s suggestion that she might slow down the timetable.
He said: “The new Energy Secretary has hinted at a more flexible approach to the clean power timeline … the minister’s true challenge will be achieving long-term energy security without overburdening vulnerable households today.”
However, Richard Tice, Reform UK’s energy spokesman, said Labour’s manifesto pledge to bring down energy bills by £300 was “in tatters”.
He said: “Labour is trying to blame gas markets but two thirds of our power bills are transmission and subsidy costs to support net zero.”
