Energy prices are set to rise a record breaking 54 percent from April after regulator Ofgem lifted the cap on tariffs to £1,971.
Ofgem has raised the maximum rate energy suppliers can charge for an average dual-fuel energy tariff by £693.
The rise will likely impact 22 million households in the UK and applies to those who are on their energy supplier’s default tariff.
Ofgem chief executive Jonathan Brearley said: “We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can.
“The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.”
The announcement was made just hours before Chancellor Rishi Sunak is set to announce help for households to deal with the massive spike in energy prices.
The government has spent weeks assessing what it can do to help customers, with potential solutions suggested including loans to energy companies and cuts in VAT or levies on energy bills.
However, as yet some of the country’s energy suppliers have not been made aware of what this plans might be.
Ofgem is set to announce new rules which will allow it to change the energy price cap in between its regular six-month reviews.
The regulator pledged the power will only be used in exceptional circumstances, and five tests will have to be passed before it can step in.
The price cap had already been set at a record high in October before the worst of the gas price spike had been seen in the market.
Cornwall Insight, an analysis outfit, said on Wednesday that it thought the price cap would be £1,915 per household.
There are also worries about next winter, when experts predict bills could spike to as much as £2,329.
Featured Image Credit: AlamyTopics: UK News
Claire Reid