Energy bills are set to rise yet further, by an eye-watering £830 per year, the head of Ofgem has said. Jonathan Brearley, the energy regulator's CEO, told MPs today that he expects the price cap to rise to "in the region of £2,800" per year.
Speaking to the House of Commons' business, energy, and industrial strategy committee, Brearley said: "I'm afraid to say conditions have worsened in the global gas market with Russia's invasion of Ukraine. Gas prices are higher, and highly volatile."
"At times, they've now reached over 10 times their normal level. 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.
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"Therefore, later today, I will be writing to the chancellor to give him our latest estimates of the price cap uplift. This is uncertain - we are only part-way through the price cap window - but we are expecting a price cap in October in the region of £2,800."
At present, the price cap means an average household with typical energy usage will pay £1,971 per year. The new expected cap would therefore mean an increase of £829, or 42 per cent, on current levels.
The news comes just two months after the price cap rose from £1,277 to the existing level of £1,971. That was a record increase, and the increase Ofgem warned of today would represent a new record increase, if it goes ahead as expected.
The expected rise would also, therefore, represent a year-on-year increase of 119 per cent. Wages are currently increasing by an average of 4.2 per cent, year-on-year, meaning millions of people will be unable to afford their bills this autumn.
Labour's shadow chancellor, Rachel Reeves, responded to the news by saying: “This is extremely concerning and will cause huge worry for families already facing soaring bills and rising inflation. How many more alarm bells does the chancellor need to hear before he acts?
"The government have got to get a grip on this crisis and to protect families and our economy. Yet again, Labour calls urgently on the government to bring forward an emergency budget, with a windfall tax on oil and gas producer profits to lower bills for families.”
Last week, the prime minister, Boris Johnson, would neither confirm nor deny whether his government would bring in a windfall tax on the oil and gas giants enjoying record profits, despite ordering his party to vote down Labour's proposal for one. He did say, however, that he would "look at all measures, in future, to support people, of course".
The energy price cap was an idea first put forward by Labour under Ed Miliband in 2015 to help protect consumers from spikes in gas and electricity prices. David Cameron, then the prime minister, rubbished it as proof Miliband wanted to live in a "Marxist universe". Theresa May, Cameron's successor as prime minister and Tory leader, adopted the idea in 2017.
