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.

Prime Minister Andy Burnham told BBC Radio 4's Today programme he would not call Rossi's crisis warning an overstatement, adding that the cost of home energy, as well as petrol and diesel, was 'very difficult indeed'.

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.

The typical annual bill would rise to £1,999 for the typical household using both electricity and gas and paying by direct debit if this level was sustained for a year. This is equivalent to about £60 per year or £5 per month.

The forecast 16% rise will come at the worst time of year, according to Craig Lowrey, principal consultant at Cornwall Insight.

'These prices are going to hit households hard,' he said. 'January is already a difficult month for many, with cold weather and bank balances still recovering from Christmas. '