Why high energy bills look like they are here to stay

Breaking news from the markets: Why high energy bills look like they are here to stayImage source, Getty ImagesByKevin Peachey Cost of living correspondentPublished26 August 2026Energy bills may have been a long way from our minds through the sweltering summer. Clothes on a washing line have been drying in minutes. Cold showers have been more tempting than hot ones.

But the latest news and forecasts on gas prices will bring a renewed sense of worry and urgency to families, as well as government ministers. Energy prices will rise by nearly 4% for millions of households in October. Even more striking is a prediction from the respected consultancy Cornwall Insight of a further 9% increase at the peak of winter in January.

Economic Details

With ongoing volatility in the wholesale gas market sparked by events in the Gulf region, the energy sector says high prices are here to stay. EDF suggests bills will remain "stubbornly high" at their current level at least until the end of the decade. As prices rise, so does debtHigh bills have, and continue to, bite.

Energy prices have been central to the cost-of-living squeeze. The typical household's dual-fuel bill is now 70% higher than it was at the start of 2021, before Russia's invasion of Ukraine. That amounts to around £600 more each year than pre-crisis levels, according to industry body Energy UK.

Inevitably, more and more people have been unable to pay. Unpaid energy debt of more than three months is now at a record high, according to regulator Ofgem. Suppliers, who chart debt levels for missed payments of a month or more, estimate total unpaid bills and charges to have reached £6bn.

Analyst Views

By the end of the year, they expect that to rise to £7bn. The average household in debt, without a repayment plan, owes more than the typical annual bill. And even if you are not in debt, you pay.

Covering the cost of debt already adds about £60 to the average annual bill. Consultancy Baringa says everyone could, on average, be paying £100 to cover the cost of unpaid debts by the end of the year. Someone who pays their bill on demand every three months, rather than a monthly direct debit, is typically already paying £150 a year to cover debt of others, owing to the greater risk of non-payment on this type of bill.

So, pressure on the government to help those most in need will only intensify. Ofgem has a proposed debt relief scheme on the table, and campaigners keep telling them to get on with it, urging the government as to provide funding for it to be implemented. Image source, Getty ImagesCharities and the industry also want ministers to introduce a discounted tariff for those who need it most - based on benefits, health and income data.

Economists are analysing what the news means for the markets.