Ofgem have announcing that the energy price cap will increase to £2,800 in October.
The boss of the energy regulator, Jonathan Brearley, told MPs today that the cap will soar from £1,971 to £2,800 due to ongoing volatility in the global wholesale gas market.
Brearley described the forthcoming price jump as a “once in a generation event not seen since the oil crisis in the 1970s” and pledged to “fix” the market.
Martin Lewis, founder of moneysavingexpert.com said via Twitter: “The Ofgem Chief Exec has told MPs the price cap will rise c42% in Oct putting typical use to £2,800/yr. I’m glad he’s been open about this, I asked last week for them to publish forward guidance. This is higher than analysts predictions of £2,600 (both bloody awful though)”.
The Liberal Democrats have called for an ‘Energy COBRA’ to bring together Ofgem, energy company bosses and government officials and ministers to discuss solutions to rising energy prices.
Leader of the Liberal Democrats Ed Davey said: “It is now or never to save families and pensioners on the brink. The government must declare the cost of living crisis a national emergency. Boris Johnson has sat on his hands for months, he cannot waste a single second longer.
“Millions of people will face the heartbreaking choice between heating their home and putting food on the table if the Government fails to act.
“The Prime Minister must finally show national leadership. An energy COBRA must be convened immediately, including hauling in energy firms to finally declare a windfall tax on their eye-watering profits.
“Britain will never forgive Boris Johnson if he fails to save families and pensioners in a national emergency.”
Progressive think tank the Resolution Foundation argue that the scale of rising fuel stress shows that the Chancellor needs to provide significant, targeted support for those at the sharp end of the cost-of-living crisis – and for the support to be delivered before the next price cap rise comes into effect.
The think tank has written to the Chancellor to say that the energy price is likely to rise by a further £800 this October – to around £2,800 a year – and why the Chancellor needs to provide significant, targeted support.
The new analysis shows that the number of families living in fuel stress – defined as spending at least a tenth of their total budgets on energy bills alone – would rise from 5 to 9.6 million (or from 22 per cent to 40.5 per cent) this Winter off the back of the upcoming price cap rise.
Across the poorest thirty per cent of the population, up to three-quarters of families could fall into fuel stress.
Jonny Marshall, Senior Economist at the Foundation, said: “UK households are set for another huge jump in the energy bills this October – just when the need to heat their homes grows – which could push up to ten million families into fuel stress.
“The sheer scale and depth of Britain’s cost-of-living crisis means the Government must urgently provide significant additional support.
“The fact that the crisis is so heavily concentrated on low-and-middle incomes households means it’s clear how the Government should target policy support. The benefits system is clearly the best route to support those worst affected in the short term – be that via an early uprating or lump sum payments to help poorer households get through the difficult winter ahead.
“Looking beyond this winter, these households will also benefit most from cheaper renewable energy and lower consumption from better insulated homes – showing why Britain needs to massively step up its retrofitting programme.”
