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British energy market regulator Ofgem announced an 80-percent hike in the energy price cap aimed at shielding consumers from price swings, promising to plunge millions more into energy poverty.
The chief executive of Ofgem, Jonathan Brearley, said that the hike would have a "massive impact" on households in the country, as annual electricity expenditure soars to the pound equivalent of over $4,100, Reuters reported.
That's not all, either. Brearley warned that another hike in the price cap would be coming in January, raising household energy bills much further, to above 6,000 pounds, according to recent forecasts. That would be almost double on the latest hike.
"The impact to society will be higher than the 2008 crash in terms of the impact on households," James Cooper, partner at consultancy Baringa, told Bloomberg a day before the Ofgem announcement. "We're now moving into territory where a majority of households are placed into debt or a very fragile financial position."
Indeed, many British households are already struggling with paying their bills, and they are accumulating more debt, too. The government is helping, but more help would be needed for the higher bills.
"The government support package is delivering help right now, but it's clear the new Prime Minister will need to act further to tackle the impact of the price rises that are coming in October and next year," Ofgem's Brearley warned, as quoted by Reuters.
Earlier this week, French utility EDF warned that as many as half of British households could slip into energy poverty by the start of 2023.
"When you look at the figures more than half of UK households will be in fuel poverty in January, meaning they will have to spend more than 10% of their disposable income on their energy bill," Philippe Commaret, managing director of customers at EDF told a BBC TV program on Wednesday.
By Irina Slav
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.