HOUSEHOLDS could see their energy bills rocket to an eye-watering £2,800 a year from £1,971 on average.
Ofgem boss Jonathan Brearley has told the the Business, Energy and Industrial Strategy Committee that it is expecting an energy price cap in October “in the region of £2,800”.
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Previous estimates predicted the price cap would rise to £2,750, according to Cornwall Insight.
The price cap went up to £1,971 on April 1 from £1,277 – adding £700 a year to bills for 22million customers.
But the Ofgem boss today told the Committee: “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.
“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.”
It means households could see their bills go up by a futher £830 when the new price cap comes in Ocober.
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The energy price cap is in place to limit how much suppliers can charge for default dual fuel tariffs in order to protect customers from sky-high bills.
But it’s mainly based on the price of wholesale energy and supplier costs.
Those have soared in recent months, meaning households are facing huge gas and electricity bills.
Rising wholesale gas prices impacted by the pandemic, lack of supply and ongoing conflict overseas, have been blamed for the cap increasing.
In previous years families were able to save money by shopping around for energy deals, but since then a number of companies have gone bust, leaving people with hardly any options on tariffs.
More than 30 firms have folded in the past year and it’s thanks to the pressures to keep up with the rising costs.
It has also meant plenty of households have been moved to new suppliers that placed them straight on the cap, meaning they had to fork out more for their bills.
And the war in Ukraine has cause prices to rocket here too, as Brits already struggle with a cost of living crisis.
The Ofgem chief executive said energy prices could go up even further up if Russia further disrupted gas supplies amid the ongoing conflict too.
Mr Brearley said: “The price changes we have seen in the gas market are genuinely a once-in-a-generation event not seen since the oil crisis of the 1970s.
“In any conceivable circumstances there would have been supplier failure.
“However, it is clear to me and it is clear to the current Ofgem board that, looking over all of our institution’s history, had financial controls been in place sooner we’d have likely seen fewer suppliers exit the market, and for that on behalf of Ofgem and its board I would like to apologise.”
Exactly what you pay for energy can vary.
The cap simply applies to your tariff – so should you use more energy, your bill can be higher.
If you’ve got more members of family in your home, or more appliances plugged in than normal, for example, you might find your costs are higher than the price cap.
Meanwhile, the energy regulator has said the price cap could soon be reviewed more frequently as well.
Instead of every six months, as is the current practice, we could get new figures every three.
If then, the price cap is reviewed four times a year, instead of twice, it could mean that households see less dramatic changes in their bills each time.
Experts are also hopeful that prices won’t keep rising for much longer, and expect the price cap to fall when it is reviewed next April.
What help is there if I’m already struggling with my energy bills?
Households are already struggling to cover the cost of their energy bills, so further rises will only mean they need more support.
Your first step should be to contact your energy supplier.
They may be able to change your payment plan or check if you’re eligible for their hardship fund.
For example, British Gas and Octopus have both set up funds to help customers who are struggling with their bills.
You should also check that you’re getting all the benefits you’re entitled to.
Use an online benefits calculator to make sure you’re not missing out on any extra cash.
Similarly, you can search for grants that can help you pay for gas and electricity bills.
The government is set to give every household a £200 discount off their energy bills around the same time that the new price cap is due to come in too.
The energy rebate was announced as part of a wider package of support that also meant households get money off their council tax too.
But with the energy discount, from next April, and for five years after that, you’ll have your bill automatically increased by £40 a year to slowly pay it back.
The government recently announced an extension to the Household Support Fund to help families with the rising cost of living earlier in the year too.
Contact your local council to find out what support is available in your area.
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