Millions of households are facing rocketing energy bills after it was announced the energy price cap would rise from the current £1,971 to £3,549 from October 1.
Energy regulator Ofgem confirmed the increase on Friday morning in an announcement that threatens to condemn millions of families to fuel poverty.
For energy customers on pre-payment meters the increase is from £2107 to £3608.
Ofgem said it had no choice because of the massive rise in the cost of wholesale gas, the biggest single determinant of retail energy prices, since the Russian invasion of Ukraine.
Chief executive Jonathan Brearley, said: “We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make. I talk to customers regularly and I know that today’s news will be very worrying for many.
“The price of energy has reached record levels driven by an aggressive economic act by the Russian state. They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.”
The government, consumed by the election of the successor to Boris Johnson, has been under pressure to do more.
Chancellor Nadhim Zahawi said on Friday: “I know the energy price cap announcement this morning will cause stress and anxiety for many people, but help is coming with £400 off energy bills for all, the second instalment of a £650 payment for vulnerable households, and £300 for all pensioners.
“While Putin is driving up energy prices in revenge for our support of Ukraine’s brave struggle for freedom, I am working flat out to develop options for further support. This will mean the incoming Prime Minister can hit the ground running and deliver support to those who need it most, as soon as possible.”
Shadow Chancellor Rachel Reeves tweeted: “Energy prices to rise by 80% in October. This is incredibly worrying and will strike fear in the heart of many families. We cannot wait any longer to act. This is a national emergency. The Tories must freeze energy bills now so households don’t pay a penny more in winter.”
The energy cap sets the maximum tariff that can be charged by suppliers for customers on standard variable rate deals. The system was introduced by Theresa May’s government in January 2019 as a way of protecting households from “rip-off” suppliers.
The cap last went up in April when the average bill rose by £693, or 54 per cent from £1,277 to £1,971 per year.
Friday’s rise, which comes into force on October 1, is even more dramatic and is almost certain to be followed by yet more sharp increases in the new year to more than £4000. Ofgem said” the market for gas in winter means that prices could get significantly worse through 2023”.
‘Even with a mild winter, millions facing big freeze’
The dramatic increase was in line with forecasts from energy sector analysts but immediately brought a chorus of protest from charities and consumer groups.
Adam Scorer, chief executive of campaign group National Energy Action (NEA) said: “The scale of harm caused by these price rises needs to sink in. A warm home this winter will be pipedream for millions as they are priced-out of a decent and healthy quality of life.
“We’ve all seen the estimates from Cornwall Insight for the past months. Government has had ample time to prepare an intervention to match the challenge. We know who gets hit hardest, what impact it will have and how to get money into the pockets or off the bills of the most vulnerable.
“Without bold action to support the most vulnerable and those on the lowest incomes, this will effectively prise their fingers from the cliff edge and push them over the precipice.
“The government needs to immediately upgrade the household support package it first announced back in May. Households need money in their pockets to weather this storm or we are going to see millions in dangerously cold homes, suffering in misery with unimaginable debt and ill health.
“Even with a mild winter, millions are facing a big freeze. Action is needed now to prevent the bleakest of winters.”
Stephen Murray, energy expert at comparison site MoneySuperMarket, said: “When it comes to preparing for autumn and winter, start now. If you pay for your energy by cash or cheque, call your supplier and find out how much you can save by switching to Direct Debit. Not only can it save you money, but it will help spread out your payments over a year rather than peaks in bills in the winter months.
“If you haven’t got a smart meter, get one so you can use the in-home display unit to see how much energy appliances use and real time costs. This can help spot where you can make changes that save you money. Most importantly, having a smart meter means your bills will be as accurate as possible. If you don’t have one, make sure you’re submitting regular meter readings.
Liberal Democrat Leader Sir Ed Davey said: “This energy price rise is nothing short of a catastrophe for millions of families and pensioners already struggling to make ends meet.
“The only option is for energy prices to be frozen before these rises wreak havoc on our communities.
“As millions suffer the Conservatives do nothing. No policy from the government, no plan from Liz Truss or Rishi Sunak. They have no idea how much pain these energy prices will cause our country. They are simply unfit to govern.”
