Energy price cap raised by 80% to £3,549 from October

Households across the UK will face a steep rise in energy bill costs from October after industry regulator OFGEM raised the maximum that suppliers can charge to £3,549 a year.

Speaking on the BBC Radio 4 ‘Today’ programme this morning, Jonathan Brearley, the CEO of Ofgem said, “I know this will be devastating for many families when they hear how much their energy bills are going up by”.

“To give you an idea, if that was happening with petrol, to fill your car would cost £400 to £500 each time”

Mr Brearley added, “Over and above this figure, the difficult news that I have to give today, is that prices look like they are continuing to rise”.

“The truth is that this is beyond the capacity of the industry and the regulator to address.  So what we are saying today, is that we have 10 days now till we have a new administration and a new prime minister.  What I am clear about is that the prime minister, with his or her new ministerial team, will need to act urgently and decisively to address this”.

Mr Brearley’s comments only further increase pressure on the government to urgently introduce a plan. The winner of the Conservative leadership contest is expected to announce a strategy promptly after their appointment on the 5th September.

Ofgem said it will not give projections for the next price cap increase set to occur in January because the market remains “too volatile”. They did, however,  warn that prices “could get significantly worse through 2023”.

The energy regulator previously confirmed the cap would be reviewed quarterly rather than every six months. Ofgem said this would allow it to “adjust much more quickly” to volatility in the market.

Following the announcement, Katie Schmuecker, Principal Policy Adviser for the Joseph Rowntree Foundation has called for immediate government intervention, saying:

“It is simply unthinkable that the price rises announced today can go ahead without further Government intervention on a significant scale. To force the burden of rising wholesale energy prices onto households will plunge many into destitution. Millions more will face the threat of bills they simply cannot pay, homes they cannot heat and stomachs they cannot fill.

“Whoever occupies number 10 next will be remembered for who they protect – they must make sure energy doesn’t become a luxury only the wealthy can afford.”

Simon Francis, Co-ordinator of the End Fuel Poverty Coalition which represents over 60 charities, local authorities and campaign groups, commented:

“Today’s Ofgem price hike is like a dagger to the hearts of millions of people up and down the country.

“All the solutions lie at the Westminster Government’s door, yet it is silent in the face of this looming disaster.

Liz Truss and Rishi Sunak have different approaches to the crisis. Truss is not an advocate on cash handouts, which she refers to as “throwing money at the problem”. Sunak, however, claims that this is the only way to stop “millions of people” from spiralling into destitution.

The new price cap level will take effect from 1 October 2022 but some suppliers may begin increasing direct debits before this date to spread the cost.