Households are expected to learn that their energy bills will rise by around 1% in October when the regulator updates its price cap.
Ofgem, which sets the limit on what energy companies can charge customers, is set to confirm its latest price cap on Wednesday.
In their last forecast last week ahead of the update, experts at Cornwall Insight predicted the typical household energy bill will rise by £17 to £1,737 per year.
The latest prediction is a turnaround from the previous forecast in July that bills would drop by 1% from the current £1,720 because of easing Middle East tensions.
Cornwall Insight said its forecast reflected changes it assumed Ofgem would be introducing in the upcoming cap period, including the expansion of the Warm Home Discount scheme for vulnerable households that would add around £15 to a typical bill, while also providing £150 in support to 2.7 million additional people.
However it also noted that wholesale prices for electricity and gas had been “volatile”, largely reflecting geopolitical factors including uncertainty over US trade policy.
Cornwall said it expected a small drop in the price cap in January, but this was dependent on geopolitical movement, weather patterns, changes to policy costs and the potential introduction of costs such as those to support investment in new nuclear generating capacity.
Last week, Dr Craig Lowrey, principal consultant at Cornwall Insight, said: “News of higher bills will not be welcomed by households, especially as winter approaches.
“While the added costs behind this forecasted rise are aimed at supporting those most in need, it does mean typical bills will increase despite relatively lower wholesale costs. It’s a reminder that the price cap reflects more than just the market price of energy.
“This immediate challenge underscores a broader uncertainty facing millions of households, with current forecasts suggesting a sharp drop in bills is unlikely in the near term.
“Longer term, Ofgem’s review of how Britain’s energy system costs are distributed could reshape the financial burden on consumers, but while some may see savings, others could face higher charges.
“The real hope for lasting relief lies in the longer-term transition towards clean power and energy independence, which offers the greatest prospect of both stability and lower costs.”
Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.
The price cap was introduced by the government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour of energy they use.
It does not limit total bills because householders still pay for the amount of energy they consume.
A Department for Energy Security and Net Zero spokeswoman said: “The only way to bring down energy bills for good is with the Government’s clean energy superpower mission, which will get the UK off the rollercoaster of fossil fuel prices and on to clean, homegrown power that we control.
“We are taking urgent action to support families this winter – in addition to expanding the £150 Warm Home Discount to 2.7 million more households, we are strengthening customer protections, including by giving people quicker and easier access to automatic compensation when their suppliers let them down.”
