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The UK hasn’t seen the worst of its cost-of-living crisis as energy bills could soar by another 42% in less than six months’ time when the energy regulator will raise the so-called energy cap again.
The UK has an Energy Price Cap in place, which protects households from excessively high bills by capping the price that providers can pass on to them. But as the price cap was raised by 54% in April —because of the high energy prices in the six months prior to the decision for the increase made by energy market regulator Ofgem in February—households are increasingly struggling to pay their energy bills.
The cap is now at $2,461 (1,971 British pounds) a year, but is likely to rise in October to $3,496 (2,800 British pounds) a year, Ofgem’s chief executive officer Jonathan Brearley said today.
“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 pounds,” Brearley told the Business, Energy and Industrial Strategy Committee in Parliament on Tuesday.
The expected rise in October would be a 42-percent jump compared to the current energy cap, which would additionally burden millions of UK consumers.
Soaring energy prices are hitting UK households and energy providers in a market that has realized that the cost-of-living crisis is not going away soon and will get even worse come next winter.
Skyrocketing gas and power prices since the autumn of 2021, pushed even higher by the Russian invasion of Ukraine early this year, have made paying the energy bills difficult for millions of Britons, while utilities are piling up losses and billions of pounds of unpaid bills.
In April, the situation grew worse when the so-called Energy Price Cap was raised by more than 50 percent, doubling the number of fuel-stressed households in the UK overnight.
The cost of living crisis “is going to get truly horrific” in October, when the twice-yearly-adjusted price cap is set to spike again, Keith Anderson, chief executive at one of the largest providers, ScottishPower, told a Parliament committee last month.
“We are seeing an uptick now, but it will get worse—a lot worse—without any further intervention, come October,” Chris O’Shea, CEO at British Gas owner Centrica, told the same committee.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.