Energy bills will rise by 80% as the energy price cap is hiked to more than £3,500 this autumn.
The energy price cap will increase from the current £1,971 to £3,549 from 1 October, regulator Ofgem announced at 7am today (Friday, 26 August).
The chief executive of Ofgem has urged the incoming prime minister to “act further” to tackle the impact of price rises as he announced the energy price cap hike.
Jonathan Brearley told BBC Radio 4’s Today programme: “I know this will be devastating for many families, when they hear how much their energy bills are going to go up.”
He said the government would need to add to the support it announced in May when bills were only expected to jump to £2,800.
“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.
“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.”
Around 45 million people in the UK could be thrown into fuel poverty as a result of the hikes, according to a study from the University of York.
York Central MP Rachael Maskell tweeted: “Why on earth should people pay £3,549 to heat their homes, water and food? The Conservatives have abandoned you in favour of the oil & gas tycoons.
“Labour has announced freezing your bills and insulating your homes. While they profit, we protect.”
Could get ‘significantly worse’
Ofgem’s price cap hike means energy bills will be almost triple their level last winter, when the price cap on the average dual fuel bill was £1,277.
And the regulator also warned that energy prices could get “significantly worse” next year.
Based on Wednesday’s gas prices, experts at consultancy Auxilione think the cap will reach £5,210 in January 2023 and £6,823 in April.
Ofgem said that some suppliers might start increasing the amount that direct debit customers pay before October 1, to spread out payments
Labour shadow chancellor Rachel Reeves, responding to the rise in the energy price cap, said: “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,” she tweeted.
The Trades Union Congress has said energy bills will rise 35 times faster than wages and 57 times faster than benefits in the last three months of this year, after the energy price cap was hiked by 80%.
Chancellor Nadhim Zahawi said the increase in the energy price cap would cause “stress and anxiety” for people, but that the Government was working to develop more options to support households.
“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,” he said.
However, no immediate extra help will be announced by Boris Johnson’s Government, with major financial decisions being postponed until either Liz Truss or Rishi Sunak is in No 10 after the Tory leadership contest.