British energy bills will soar 80% to an average of £3,549 a year from October, UK regulator Ofgem said on Friday.
Ofgem called the situation a “crisis” that needed to be tackled by urgent government intervention.
Ofgem CEO Jonathan Brearley said another increase is likely in January as wholesale gas prices hit record levels driven by Russia cutting supplies to Europe.
Brearley said the UK’s next prime minister — either Liz Truss or Rishi Sunak — will need to act as soon as they are in office on September 5.
“The response will need to match the scale of the crisis we have before us,” he said.
Increases in wholesale energy prices are passed on to British consumers through a price cap, calculated every three months.
The price cap was designed to stop energy suppliers making high profits — but it is now the lowest price available for about 24 million households.
Forecaster Cornwall Insight said British Energy prices are likely to soar again in 2023.
Cornwall Insight said it expects energy bills to be just below £6,000 through next year, which means meaning households could be paying almost £500 pounds a month for gas and electricity.
Brearley added: “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.
“We are working with ministers, consumer groups and industry on a set of options for the incoming Prime Minister that will require urgent action …
“With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.”
REACTION:
ScottishPower chief executive Keith Anderson, who has proposed a two-year energy bill freeze at an estimated cost of £100 billion to the UK government: “The size and scale of this issue is truly catastrophic for UK households and that’s why only a big solution can tackle it once and for all to shelter people from the worst this winter.
“We have offered Government a plan, backed by the industry, that can be delivered this year, tailored in line with their priorities and will support the UK economy — with the cap set at £3,549, what billpayers need now is to hear what additional help is coming.”
Scotland’s First Minister Nicola Sturgeon: “This is simply unaffordable for millions. It cannot be allowed to go ahead.
“This rise must be cancelled, with the UK gov and energy companies then agreeing a package to fund the cost of a freeze over a longer period, coupled with fundamental reform of the energy market.”
Kevin Brown, savings specialist at Scottish Friendly: “Energy prices almost doubling is unmanageable for millions of UK households and could lead to widespread fuel poverty.
“Rising gas and electricity prices are causing families significant financial stress and forcing many to reduce their consumption.
“Our figures show that 50% of people citing utilities as one of the most noticeable sources of cost pressure, have already cut back their energy use because of higher prices.
“If left unresolved the situation is going to get worse and more people will have to make difficult choices about where their money goes.
“Borrowing is already on the up and if the energy price cap were to rise again in January, then it’s going to push more people into the red.
“We must consider the consequences of this and the impact on peoples’ long-term financial wealth and well-being.”
Becca Lyon, head of child poverty at Save the Children: “Children are at serious risk from today’s announcement and could spend this winter in cold homes, with fewer hot meals, despite the best efforts of their parents and carers.
“Our children deserve better.”
Frances O’Grady, general secretary of the TUC: “Millions are facing bankrupting bills in the months ahead …
“Ministers must immediately cancel this catastrophic increase. This is the worst possible time for the government to go missing in action.”
Matthew Reed, chief executive of end-of-life care charity Marie Curie: “The need to stay warm to keep pain at bay and power specialist medical equipment means that energy bills for some terminally ill people will be thousands of pounds higher than the average household.
“Many won’t be able to afford this. With 30% of excess winter deaths attributable to cold, damp housing, this could cost lives.
“Our research shows that working age people are at a huge risk of falling into poverty after a terminal diagnosis. They often have to give up work.
“They don’t qualify for their state pension. They cannot claim Winter Fuel Payments and do not automatically qualify for the Warm Home Discount scheme either.
“Dying people are falling through the cracks. They need targeted government support now.”
more to follow …