Monthly energy bills for prepayment meter (PPM) customers over the next winter are on course to peak at £428 in January due the latest surge in energy prices following Russia’s invasion of Ukraine, a fuel poverty charity has warned.
The forecast from the Fuel Bank Foundation is based an assumed annual bill of £3,000 – its central estimate for the 12 months from the start of October – which equates to an average of £250 per month.
Prior to the invasion, the charity was predicting that PPM customers would have to pay £321 in January 2023 based on an assumed annual PPM price cap of £2,299 from October.
The price cap for direct debit customers was previously forecast to rise to £2,247 at the same time. The Fuel Bank Foundation said the £250 monthly bill it is now predicting would represent an increase of £144 when compared to the current price cap level for direct debit customers.
Other analysts have predicted even higher energy bills recently.
In the hours after Russian troops crossed the border into Ukraine front-month gas prices spiked by around a third, prompting Investec analyst Martin Young to predict the default tariff cap to rise to £3,238 in October – a 64% increase over the new price cap level of £1,971 for the six-month period beginning in April.
Since then wholesale costs have continued to soar and reached a new all-time high of 800 pence per therm (p/th) on Monday morning (7 March).
The Fuel Bank Foundation is calling on the government to do more help vulnerable customers who cannot afford to heat their homes.
“At these levels, the harsh reality is that by next winter, many families will be forced to live in extreme fuel poverty, without heat, hot water or a hot meal,” said Matthew Cole of the Fuel Bank Foundation.
Cole said the £150 council tax rebate and the £200 energy bill loan announced as part of the government’s £9 billion support package was “insufficient and too broad brush”, and that more targeted financial support is needed.
He added: “Financial support must also be meaningful and cover the monthly uplift families will face. An annual £150 Warm Homes Discount (WHD) payment will not mitigate the significant monthly increases that families already defined as struggling will face in a few short months.
“To put this into context, if annual fuel bills reach £3,000, which they realistically could, the WHD payment would need to be around £2,000 to have any sort of financial benefit.
“The government needs to act now to protect the most vulnerable ahead of the significant price hikes at the end of the year and start of 2023. Failure to do so will result in a catastrophic fuel poverty crisis.”
The End Fuel Poverty Coalition (EFPC) – a group representing more than 50 organisations including National Energy Action – recently issued a stark warning that the crisis could leave 8.5 million households unable to heat and power their homes.
This would be 2 million more than the 6.5 million households that the NEA said are already expected to be left in fuel poverty following the price cap hike in April.
The EFPC claimed that without further action from the chancellor in his Spring statement due later this month, more frail and older people will die next winter.
The cost of living crisis and how utilities can respond to it will be a key part of the debate at Utility Week’s Customer Summit on 16 & 17 March. Find out more here.