Ofgem has confirmed its energy price cap will hit £3,549 in October for those on default tariffs paying by direct debit.
This is an eye-watering rise of £1,578 - or roughly 80 per cent - from the current price cap level of £1,971.
For those paying by prepayment meter, there is a bigger jump from £2,017 to £3,608.
Standard credit customers - so where you pay once you've received your bill - will see their price cap rise from £2,100 to £3,764.
The price cap currently covers around 24million households.
Despite what its name suggests, the price cap isn't a limit on how much you pay for energy.
Instead, it sets a limit on the rates a supplier can charge for each unit of gas and electricity you use.
The price cap is altered every three months, in January, April, July and October.
This means the next time it will be reviewed is in October, then again in January.
Here's some helpful Q&A advice about what help you could get to help with the soaring cost of energy
What Government help is available now?
There is a £400 non-repayable discount on almost all energy bills from October. There is also a £650 one-off cost of living payment for eight million house-holds on means tested benefits. Pensioners get a one-off £300 cost-of- living payment, and there’s £150 for six million people on certain disability benefits.
What further help is likely?
It’s up in the air until the next PM is decided. Suppliers want a £100bn loan scheme to allow them to freeze bills for two years.Labour would freeze bills, for six months, partly paid for by an increased windfall tax on energy giants. Other ideas include one-off payments of possibly £400 to over £1,000.
What help might my energy company give?
Most have a fund those most in need can call on. British Gas has pledging to donate 10% of its profits to its version of the scheme.
Could the cap hit £6,000 next year?
If anyone suggested a year ago bills would hit £3,500 now it would have been considered highly unlikely. Much depends on what happens with Russia ’s war in Ukraine. Ofgem has until now used a six- month window for wholesale prices to determine its price cap. Forecasts for January’s cap change is becoming more ‘baked in’ by the day but next April is still a big unknown.
Why doesn’t Ofgem refuse to lift the cap?
They say suppliers wouldn’t be able to absorb the surge in wholesale costs, leading to a wave of failures.
I can’t pay. What do I do?
Normally you’d con- tact your supplier and ask them to be lenient and sort out a way to clear your debtsor contact a charity such as National Energy Action. Both still apply but we need real Government help now.
I won’t pay. What will they do?
The Don’t Pay UK campaign is nearing 115,000 signatures, so it’s an idea that has struck a cord. Not paying risks leaving you with a bad credit rating and being made to have a prepayment meter.
