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Price ceiling for 24 million households to rise from October Even higher prices are expected in January The regulator is calling for urgent government intervention “This is a national emergency,” says the Labor opposition

LONDON, Aug 26 (Reuters) – British energy bills will jump 80 percent to 3,549 pounds ($4,188) on average annually from October, the regulator said on Friday, plunging millions of households into fuel poverty and businesses at risk, unless the government acts on. Ofgem chief executive Jonathan Brearley said the rise would have a huge impact on households across Britain and another rise is likely in January as Russia’s move to cut European supplies sends wholesale gas prices high record. “This is a disaster,” said Britain’s top consumer rights campaigner Martin Lewis, warning that people would die if they refused to cook food or heat their homes this winter. Sign up now for FREE unlimited access to Reuters.com Register Brearley said the government’s response must match the scale of the crisis with “urgent and decisive” action. Prime Minister Boris Johnson, who has less than two weeks in office, said his successor would announce “extra cash” targeting the most vulnerable next month. “But what I don’t think we should do is try to put a cap on everybody, the wealthiest households in the country,” he told reporters. In May, when price forecasts were significantly lower, the government announced a £400 ($472) discount on consumer bills for this winter. The opposition Labor Party has said that if in power it would freeze prices, which could cost around £60bn a year – almost as much as the COVID pandemic leave scheme. The pressures are being felt across Europe, but in Britain, which is particularly dependent on natural gas, the price rises are dramatic. read more An average annual bill of £1,277 last year will rise to £3,549 this year and leading forecaster Cornwall Insight said prices are likely to soar again in 2023. It expects bills to peak in the second quarter at £6,616 and households could pay around £500 a month for energy in 2023, more than the rent or mortgage for many. The rise has pushed inflation to a 40-year high and the Bank of England has warned of a long recession. Despite the bleak outlook, Britain’s response has been hampered by the race to replace Johnson, which runs until September 5, centered on votes from Conservative party members who want tax and spending cuts. The two candidates – Foreign Secretary Liz Truss and former Chancellor of the Exchequer Rishi Sunak – clashed over how to respond, with front-runner Truss initially saying she would rather cut taxes than hand out “handouts”. Both sides have acknowledged that the poorest in society will need support, and the government went further on Friday by saying households should look at how much energy they use – after previously saying people would know what to do.

“NATIONAL EMERGENCY”

The Labor Party said the country could wait no longer to act. “This is a national emergency,” said finance spokeswoman Rachel Reeves. Truss and Sunak proposed suspending environmental levies or cutting sales tax — both ideas dismissed by analysts as doing little to soften the big blow to household budgets. Increases in wholesale prices are passed on to British consumers through a price cap, calculated every three months, which was designed to stop profiteering by energy suppliers but is now the lowest price available for 24 million households. Such is the volatility in the sector that nearly 30 energy retailers have gone out of business and Ofgem said most domestic suppliers are not making a profit. Supplier E.on said Britain should speed up its move away from natural gas and better insulate its Victorian-era housing stock, while rival Scottish Power urged the government to set up a deficit fund to keep bills down and to spread the cost over a 10-15 year period. Ofgem said customers who could not pay their bills would be offered affordable repayment plans by their supplier. They will be forced to move to prepaid-only meters, which charge above-average rates, as a “last resort”, it said. The market is too volatile to predict the next peak for January, Ofgem said, but conditions in the gas market over the winter meant prices could get “significantly worse” by 2023. ($1 = 0.8463 pounds) Sign up now for FREE unlimited access to Reuters.com Register Reporting by Paul Sandle and Kylie MacLellan. edited by Kate Holton, Jason Neely and Toby Chopra Our Standards: The Thomson Reuters Trust Principles.