Ofgem has confirmed that its latest price cap will rise to over £3,000 in October, marking the latest crushing blow in the cost of living crisis.
The move will plunge millions of households into financial difficulty as the price cap is hiked to £3,549 a year. It will see a typical default tariff customer paying an extra £1,578 annually.
Those on pre-payment meters will be hit even harder, with average annual bills to jump to £3,608. Often these customers are the most vulnerable and are already in fuel poverty.
Ofgem, the government regulator for Great Britain, last updated its price cap in April. That saw a 54 per cent increase, surging bills to £1,971 a year. Approximately 24 million households will be hit by the price spike in October.
Russia’s invasion of Ukraine has helped fuel soaring wholesale gas costs.
Ofgem chief executive Jonathan Brearley said in a statement: “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 support package is delivering help right now, but it’s clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year.”
He continued: “We are working with ministers, consumer groups and industry on a set of options for the incoming prime minister that will require urgent action.”
“The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.”
The sharp rise will further add to inflation, which the Bank of England is forecasting will hit 13 per cent in the autumn, having already reached a 40-year peak of 10.1 per cent last month.
The government has pledged that all households will receive £400 to help with bills, with more for the vulnerable. However, there have been widespread calls for more help.
MoneySavingExpert guru and consumer champion Martin Lewis has claimed that “lives will be lost”, writing on his Twitter today (26 August): “Today’s 80% rise is hideous but NOT a surprise.
“I’ve been accused of catastrophising about the energy hikes that have now come true. Yet let me be plain, ‘doom-mongering’ or not. More help is desperately needed for poorest or people will die this winter due to unaffordability of an 80% SO FAR energy price cap hike.”
Prime Minister Boris Johnson has said that he will leave major decisions on extra support to his successor, who will not be announced until 5 September after the Tory leadership contest.
Leadsership frontrunner Liz Truss said earlier this week that she would use an emergency budget to “ensure support is on its way” if she becomes prime minister, having previously stressed that she favoured tax cuts over handouts.
She has also promised to cut green levies, while her rival Rishi Sunak has pledged more targeted support and to remove VAT from energy bills.