British energy bills will jump 80% to an average of $4,188 a year from October, the regulator said on Friday, plunging millions of households into fuel poverty and businesses into jeopardy unless the government steps in.
Ofgem CEO Jonathan Brearley said the rise would have a massive impact on households across Britain, and another increase was likely in January as Russia’s move to throttle European supplies drives wholesale gas prices to record levels.
“This is a catastrophe,” Britain’s leading consumer rights champion Martin Lewis said, warning that people would die this winter if they refused to cook food or heat their homes.
Brearley said the government response needed to match the scale of the crisis. A proposal by the opposition Labour Party to freeze energy prices could cost around 60 billion pounds a year – almost as much as the COVID pandemic furlough scheme.
The pressures are being felt across Europe but in Britain, which is particularly dependent on gas, the price rises are eye-watering.
Increases in wholesale prices are passed on to British consumers through the price cap, calculated every three months, that was designed to stop energy suppliers profiteering but is now the lowest price available for 24 million households.
Such is the volatility in the sector that almost 30 energy retailers have gone out of business and Ofgem said most domestic suppliers were not making a profit, Reuters reported.
