Ofgem's chief executive Jonathan Brearley has announced the UK's energy price cap is expected to increase to £2,800 later this year in what he describes as 'genuinely a once-in-a-generation event not seen since the oil crisis of the 1970s'.
The news comes as the cost of living crisis deepens, with soaring inflation rates and energy bills pushing many low-income households even further into poverty.
Currently the energy cap – aka the maximum price per unit suppliers can charge you – sits at £1,971, which was already a staggering £693 rise from the previous cap, and saw households pay an extra £700 a year on average.
Now, the crisis looks set to intensify as Brearley told the Business, Energy and Industrial Strategy Committee the public could be forking out more once again come October.
He said: “I am afraid to say conditions have worsened in the global gas market since Russia’s invasion of Ukraine. Gas prices are higher and highly volatile. At times they have now reached over 10 times their normal level.
“I know this is a very distressing time for customers but I do need to be clear with this committee, with customers and with the government about the likely price implications for October.
By my reckoning, a £2,800 price cap would take energy bills to the highest level as a proportion of household spending since comparable records began in the 1950s https://t.co/QWCkc6kIeO pic.twitter.com/w9BxrEjVk5— Ed Conway (@EdConwaySky) May 24, 2022
“Therefore later today I will be writing to the Chancellor to give him our latest estimates of the price cap uplift.
“This is uncertain, we are only part way through the price cap window, but we are expecting a price cap in October in the region of £2,800.”
He added: "Our future scenarios when we look beyond that, we're really managing between two extreme versions of events - one where the price falls back down to where it was before - for example if we did see peace in Ukraine - and one where prices could go even further if we were to see, for example, a disruptive interruption of gas from Russia."
Following the announcement, Downing Street said it acknowledged the surge in energy costs were a 'significant challenge', with a spokesperson confirming the government is 'actively looking at what more could be done in this space'.
"Some of the support is designed to come in in October, £200 will be discounted from energy bills, the warm home discount will increase to £150 and be expanded to cover three million people, cold weather payments and winter fuel payments will be available again," the spokesperson said.
The announcement comes just days after the energy regulator said the price cap could start to be reviewed every three months instead of every six.
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Topics: UK News