Ofgem announced on Aug. 26 that the energy price cap for around 24 million households in England, Scotland, and Wales will rise by 80.06 percent on Oct. 1, sending the average household’s yearly bill from £1,971 to £3,549 ($4,200).
“The increase reflects the continued rise in global wholesale gas prices, which began to surge as the world unlocked from the COVID pandemic and have been driven still higher to record levels by Russia slowly switching off gas supplies to Europe,” said the regulator.
It warned that “prices could get significantly worse through 2023.”
The Bank of England has forecast that higher gas prices will push inflation above 13 percent by the end of the year, while Citigroup this week warned it could hit 18.6 percent in January, the highest in almost half a century.
Ofgem’s chief executive Jonathan Brearley urged the incoming prime minister and new Cabinet “to provide an additional and urgent response to continued surging energy prices.”
He said: “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.”
‘Stress and Anxiety’
The government of Boris Johnson, who is set to step down as prime minister on Sept. 6, has refused to offer immediate extra help, as major financial decisions have been postponed until either Foreign Secretary Liz Truss or former chancellor Rishi Sunak is in Downing Street after the Conservative Party leadership contest.
Chancellor Nadhim Zahawi. said the increase in the energy price cap would cause “stress and anxiety” for people, but that the government is working on further support for households.
“While (Russian President Vladimir) Putin is driving up energy prices in revenge for our support of Ukraine’s brave struggle for freedom, I am working flat out to develop options for further support,” he said.
“This will mean the incoming prime minister can hit the ground running and deliver support to those who need it most, as soon as possible.”
Truss, currently the frontrunner in the Conservative Party leadership race, told party members on Aug. 25 that she would take “decisive action” to deliver “immediate support” if she becomes prime minister.
At an election hustings held in Norwich, she also pledged to “fix the problems at the heart of this energy crunch at their source” by “radically” boosting domestic supplies.
PA Media contributed to this report.