Energy bills could sky-rocket in Britain to £2,800 in the autumn for millions of households, the energy watchdog said on Tuesday.
Jonathan Brearley, chief executive of Ofgem, is writing to Chancellor Rishi Sunak warning him about the huge hike in the energy price cap from £1,971 now.
He told the Commons business committee: “I know this is a very distressing time for customers.
“But I do need to be clear with this committee, with customers and with the Government about the likely price implications for October.
“Therefore later today, I will be writing to the Chancellor to give him our latest estimate of the price cap uplift.
“We are expecting the price cap in October to be in the region of £2,800,” he added, stressing that work was still ongoing over how far the cap will rise.
It is being driven higher by the Ukraine war which has sent the wholesale cost of gas spiralling.
The rise would be an eye-watering £830 a year, plunging more households into fuel poverty.
The rise would mean that the cap will have more than doubled in a year.
Appearing before the Commons Business, Energy and Industrial Strategy Committee , Mr Brearley explained what was fuelling the hike.
“I am afraid to say conditions have worsened in the global gas market since Russia’s invasion of Ukraine. Gas prices are higher and highly volatile. At times they have now reached over 10 times their normal level,” he said.
The huge increase in bills for millions of households will increase pressure on the Government to bring in a windfall tax on oil and gas giants to raise billions to ease the cost-of-living pain for at least the most vulnerable households.
Update - energy suppliers have met the deadline and responded to Ofgem's market compliance review.
— Kwasi Kwarteng (@KwasiKwarteng) May 24, 2022
The regulator will now analyse their responses. I have been assured by Ofgem they will do this rapidly, and will take compliance and enforcement action where necessary. https://t.co/X7IlCE93x5
Some energy companies have been accused of bumping up direct debits of customers too high as they themselves struggle to deal with the soaring cost of gas.
Business Secretary Kwasi Kwarteng stressed this issue was being probed by the watchdog.
He tweeted: “Energy suppliers have met the deadline and responded to Ofgem’s market compliance review.
“The regulator will now analyse their responses. I have been assured by Ofgem they will do this rapidly, and will take compliance and enforcement action where necessary.”
Asked about this by the committee, Mr Brearley responded: “If we see that direct debits have been unfairly taken then we will be taking enforcement action against these companies.
“For every customer we will be expecting those companies to return that money to customers.
“Equally, we will be considering whether we need to go further than that.”
