Price cap forecast
Typical energy bill set ‘to rise by £800 a year’
Households were today warned to expect the price of energy to rise by an average £800 a year in October.
Ofgem boss Jonathan Brearley made the admission to MPs, explaining that the energy price cap, which limits how much providers can raise prices, is expected to increase to £2,800 a year. The price cap already rose last month by£700 to £1,971.
Mr Brearley said the price rises were a “once in a generation event not seen since the oil crisis in the 1970s” and that the number of people in fuel poverty may double to 12 million.
Mr Brearley told the business select committee of MPs that Ofgem was only part way through reviewing prices ahead of setting the next cap in October, but added: “We are expecting a price cap in the region of £2,800.”
Justina Miltienyte, head of policy at Uswitch.com, said: “This admission from Ofgem confirms the worst fears of everyone who is currently struggling to pay their energy bill. Although we have long expected the price cap will rise again in October, this is the first time the regulator has estimated how high it could soar.
“The final figure is still uncertain as we have a few months left before the announcement, so it could go further up or down, depending on the market volatility.
“This revelation by Ofgem will be especially worrying for those on the lowest incomes who are already struggling, and the need for more support could not be more urgent.
“Nearly a quarter of consumers are already in debt to their supplier, and are facing financial pressures from all sides. Now is the time for the government to act and put together a comprehensive package of help for the most vulnerable before it is too late.”
Andrew Bartlett, chief executive of Advice Direct Scotland, said: “This prediction will be devastating for households across Scotland.
“Many are already struggling with huge rises in recent months, pushing them into debt and financial hardship.”
Gary Smith, GMB General Secretary, said: “If Jonathan Brearley is right, this whopping increase in the energy price cap will turn a cost of living crisis into a catastrophe for low paid workers.”
Rachel Reeves, Labour’s Shadow Chancellor, said: “How many more alarm bells does the Chancellor need to hear before he acts? The government have got to get a grip on this crisis and to protect families and our economy.”
SNP MP Alan Brown, a member of the Business Energy and Industrial Strategy committee, said: “The reality is the Tories are more focused on saving the Prime Minister’s skin rather than supporting families.”