The Office for Budget Responsibility has revised its forecast for the year ahead and now estimates that consumers’ energy bills will rise by around £100 this year, and continue to increase in 2014.
The independent analyst expects electricity and gas prices to rise by 7% by the end of 2013, with a further 3% rise next year, based on current trends.
New figures were released by the organisation alongside Chancellor George Osborne’s 2013 Budget, with the data predicting another tough winter for UK consumers, many of whom were plunged into fuel poverty in winter 2012/13.
Cold, hard winter
It follows hot on the heels of an Ofgem report that predicted energy suppliers are set to more than triple their margins this year, by making a £110 profit from every domestic property.
The energy regulator estimates that the average domestic gas and electricity bill has risen from £1,310 to £1,420 over the last 12 months, as households increasingly feel the squeeze.
However, the OBR now says that this will increase to £1,519 by the end of the year – a rise of £99 – followed by another £46 hike next year.
The economic watchdog expects rising fuel costs to play a key role in increasing the cost of living for millions of consumers, noting that rising wholesale electricity and gas prices are the main factors at play.
Counting the cost
Other reasons behind the increases include the introduction of green taxes and environmental policies, which are estimated to add around 2% to electricity bills and 0.5% to gas bills every year until at least 2020.
Upgrading the country’s electricity networks is also set to add around 2% a year to energy bills for the foreseeable future as energy companies introduce new power stations and wind farms to replace fossil fuel plants.
It comes after the OBR also shot down Alex Salmond’s predictions that Scotland is set to enjoy an oil boom.
The analyst’s downbeat predictions regarding future oil revenues are at odds with the Scottish First Minister’s expectations; by 2017-18, the OBR expects revenue to be around £7.5 billion lower than Mr Salmond’s recent prediction of £34 billion.