The boss of the energy regulator Ofgem has said that cost of heating and electricity is likely to rise to £2,800 for the average household this October. That is up from £1,971 a year now.
The huge hike in the price cap will see most households being forced to pay £233 a month for gas and electricity - up from £164 after the earlier price hike in April this year. Until this spring's price hike, the average bill had been just £1,277 a year equivalent to £106 a month.
Jonathan Brearley, the chief executive of Ofgem, gave the figure in answer to MPs today and said it would affect 23 million households. Mr Brearley was speaking to the Commons' business, energy and industrial strategy committee and warned that could go up further if there is a further disruption of gas from Russia. He said that the global gas market conditions had "worsened" and prices are ten times higher at some points.
He said he will write to the Chancellor this afternoon and detail current projections. He said looking beyond October there were two extreme versions of events, one where peace in Ukraine means prices returning to their previous level and the other where prices continue to rise.
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He said the volatility in the gas market is "huge". "The price changes we’ve seen in the market are genuinely a once in a generation event not seen since the oil crisis in the 1970s," he said. Mr Brearley said had financial controls been in place sooner, fewer energy suppliers would have gone bust and for that, he apologised.
He was asked how many people will be left unable to pay bills, so called bad debt. He said: "With this scale of change it's very hard to project what that may be".
Mr Brearley said Ofgem has had to "make some really tough decisions".
Neil Lawrence, director of retail at Ofgem says bad debt is currently at £1.3bn but that doesn't include recent changes.
Gower Labour MP Tonia Antoniazzi asked how the plan to raise the energy cap will affect vulnerable households. Mr Brearley said: "The thing I need to emphasise is that the changes you make to the frequency of the price cap don't change the amount people pay for their energy overall. That needs to be paid over the course of a year."
Mr Brearley warned that further energy companies could fail. He said he knew the price cap news was "highly distressing" and that Government, Ofgem and energy companies had to work together.
