The energy price cap will be raised to approximately £2800 in October, which could leave 9.6 million families in fuel poverty according to independent think-tank The Resolution Foundation.
The £800 increase was announced earlier today by Ofgem CEO, John Brearley, at the Business, Energy and Industrial Strategy Committee meeting after prices originally rose in April by 54%.
Families have already been struggling, as prices have been driven up by the war in Ukraine, with inflation now at 9%.
Mr Brearley said: ‘I’m afraid to say conditions have worsened in the global gas market, with Russia’s invasion of Ukraine.
‘Gas prices are higher and highly volatile. At times they have now reached over 10 times their normal level. Later today I will be writing to the chancellor to give him our latest estimate of the price cap uplift.
‘This is uncertain, we’re only part-way through the price cap window, but we’re expecting a price cap in October in the region of £2800.’
It’s unclear what will happen past October, but the Ofgem CEO said regulators were managing between two potential scenarios: one in which prices fall back to where they were previously and another where prices rise even further.
He also added that the price rise was ‘genuinely once in a generation, not seen since the oil crisis in the 1970’s.’
Analysis from The Resolution Foundation has shown that the price cap rise number of families living in fuel poverty is likely to rise from 5 to 9.6 million people.
This means they will be spending up to a tenth of their total budgets on energy bills alone and up to three-quarters of the poorest 30% of families in the UK could fall into this bracket.
The organisation is calling for the government to ramp up financial support, especially for lower income households who are struggling the most with the cost of living crisis.
It’s also been pointed out how vital a transition to renewable energy and improving energy efficiency is to tackling the fuel crisis.
Jess Ralston, Senior Analyst at the Energy and Climate Intelligence Unit (ECIU) said: ‘Insulation is the only way to permanently bring down bills and could start to make a difference for struggling families ahead of this winter.
‘Treasury’s objection to greater investment is going to look even more tone-deaf given bills are now set to leap so much higher in October. The gas crisis clearly isn’t going away and prioritising insulating both the country and our homes from volatile gas prices and Putin’s interference seems even more urgent than ever.’
Photo by Mykola Makhlai