Ed Miliband has urged the energy watchdog to take swift action as it emerged that the typical energy bill could soar by more than £100 a year amid a rise in global gas prices.
A Whitehall source said they expected bills in England, Scotland and Wales to increase by about £9 a month over the next three months in another challenge to government plans to tackle the cost of living.
They blamed volatile global gas prices linked to the end of the transit deal that enabled gas to flow to Europe, through Ukraine, from Russia.
Miliband, the energy secretary, has written an urgent letter to Ofgem, saying the price rise means the energy regulator must move faster to protect consumers.
This month, gas prices hit a two-year high, exacerbated by the lack of gas storage in Britain and Europe, combined with colder weather though prices have begun to stabilise. Cornwall Insight, a consultancy which produces closely watched forecasts for the energy price cap, is set to release its latest forecast on Tuesday.
Miliband has asked the Ofgem chief executive to set out faster mitigations that the regulator can take to ease the pressure of the “rollercoaster” of global gas markets. The energy secretary is likely to use the high prices to shore up support within government for his focus on expanding renewables.
“In recent months we have seen once again the dangers for our country of being exposed to fossil fuel markets controlled by petrostates and dictators,” he wrote in the letter, where he said the UK was “highly exposed to these global gas markets”.
“Once again, the British people and British businesses will face the consequences of fossil fuel markets we do not control,” he added.
But the rise in bills is likely to add pressure to the government who were already facing criticism for removing the winter fuel allowance from pensioners. Miliband said Ofgem “must leave no stone unturned in seeking to help people through the difficulties they are facing”.
Ofgem will make and announce its final decision on the next cap on 25 Feburary. The Treasury source’s estimate suggests the new annual cap figure would be £1,846 for gas and electricity. The regulator increased the energy price cap in January by 1.2% to a rate equivalent to £1,738.
The cap limits the rate energy suppliers can charge customers for each unit of gas and electricity – though it does not limit the total bill. Especially hard hit will be about nine million homes on variable tariffs linked to the price cap, who will see an immediate impact on their bills. Others on fixed tariffs are likely to see a delayed impact.
Miliband wrote to Ofgem chief executive Jonathan Brearley saying the regulator should crack down on inaccurate and large bills and urged it to speed up the next stage in the regulator’s proposals to give bill payers options to pay a zero standing charge.
He also said Ofgem should speed up enforcing compensation for customers affected by wrongful installations of prepayment meters.
The predicted price cap increase in April will mean bills are more than £600 a year above where they were before Russia’s invasion of Ukraine in February 2022.
Parts of the country have been hit by snowfall this week but warmer weather is predicted towards the end of the month, which could further ease the pressure on gas supplies and household budgets.
In January, Citizens Advice found the number of people in England and Wales who sought help with incorrect energy billing jumped by 20% last year. An analysis by Guardian Money published this week found Britain’s big energy providers had paid more than £20m in compensation to customers for billing mistakes over the past five years, with British Gas paying out more than a fifth of the total.
