Investec Bank Ltd estimated on 24 February 2022 that the energy price cap could spike another 50% in October to more than £3,000 per household, following large gains in the wholesale natural gas and electricity markets1. The estimate was reported by the End Fuel Poverty Coalition, which said the figure followed the Russian invasion of Ukraine and soaring wholesale prices2.
The cap covering Great Britain was already being raised from 1 April 2022, a jump of an additional £700 per year that took the "average" domestic energy bill to £2,0001. The Coalition said that rise would leave a further 2 million households in fuel poverty1. Its estimate of the total number of UK households in fuel poverty in April was given as 6.5 million in one account1 and as 6.3 to 6.5 million in another2, an increase of more than 50% in just over six months on either figure1. The projection uses the 10% definition of fuel poverty1.
The Coalition, which represents almost 50 organisations according to National Energy Action1 and over 50 according to its own website2, warned that a £3,000 average bill would leave 8.5 million UK households in fuel poverty, or one in three households1. Adam Scorer, chief executive of National Energy Action, said:
"When energy bills hit £2,000 a year there will be over 6.5 million UK households in fuel poverty. Analysts suggest the war in Ukraine could drive average bills to £3,000 per year. This could leave 8.5 million UK households in fuel poverty denied a warm safe home."
Age UK's charity director Caroline Abrahams said the support announced by the Government was "nowhere near enough" and asked how those on the lowest incomes would find an extra £350 to cover their energy bills1. She said Age UK was concerned about households using prepayment meters, described as typically a more expensive way to pay for energy, and how many would ration and disconnect from supply1.
Separately, the charities said newly released Government fuel poverty statistics did not capture the recent bill increases, and warned it would take over 60 years for the Government to meet its statutory fuel poverty commitments1. They also said less than half of a 2019 manifesto pledge to invest £9.2bn in the energy efficiency of homes, schools and hospitals in England, including £2.5bn for the Home Upgrade Grant Scheme, had been committed1. The Coalition said there had been a long delay in implementing consulted-on changes to the Energy Company Obligation, Warm Home Discount and Minimum Energy Efficiency Standards in the private rented sector1.
Why it matters for households
The cap sets a limit on unit rates and standing charges, not on the total bill, so the "typical household" figures used here describe a usage pattern rather than a ceiling any home is guaranteed to stay under. A move from £2,000 to more than £3,000 would be a further increase of roughly half within a single year, on top of the £700 April rise, and it would arrive alongside the same wholesale market movements that drive the cap in the first place. For a household, the practical effect is that the cost of each unit of gas and electricity, and the standing charge paid regardless of use, both rise, so the same rooms at the same temperatures cost more to run. That reduces the share of a home's energy that its own budget can cover, and it makes the fixed parts of a bill, such as standing charges and prepayment meter costs, harder to avoid. Energy efficiency measures are the main lever a household has over how much energy a given level of warmth requires, which is why the charities frame the unspent efficiency funding as part of the same problem. The Coalition also described ending fuel poverty as a national security priority2, linking household energy affordability to the wider question of how the country sources and pays for its energy.
What happens next
The charities called on the Chancellor to use his Economic Statement in March 2022 to cut bills further for the poorest households and to rethink the "heat now, pay later" rebate1. The April cap change takes effect on 1 April 20221. The October cap level referred to in the Investec estimate had not been announced at the time of these reports; the estimate is a bank projection, not a confirmed cap figure1.