Household energy bills forecast to see biggest rise in four years

Household energy prices are set to soar in January, with a typical annual bill forecast to jump by £276, figures shared with the BBC reveal.

The 16% predicted increase would hit millions of households at the coldest time of year, and would mark the biggest rise in bills for four years.

The forecast from consultancy Cornwall Insight comes a day before prices go up under regulator Ofgem's October price cap and puts increased pressure on the government to support those who will struggle to pay.

Meanwhile, the boss of supplier EDF Simone Rossi has warned the UK is "walking into a second energy crisis" and called for an extension to the VAT cut on electricity which kicks in on Thursday.

About 20 million households in England, Scotland and Wales are on variable energy tariffs set by Ofgem's price cap, which puts a maximum price on each unit of gas and electricity.

Those homes will see a 4% increase in prices on Thursday, the equivalent of about £60 per year – or £5 per month – taking an annual bill to £1,723 for the typical household using both electricity and gas and paying by direct debit if this level was sustained for a year.

That rise would have been higher without the government's VAT cut, which knocks the equivalent of about £45 a year off a typical bill.

But forecasts show a far greater increase is possible for bills in January. Cornwall Insight said its latest forecast suggests the typical annual bill would rise to £1,999.