Ofgem has today announced that the energy price cap will increase from April 1 for approximately 22 million customers.
The energy price cap sets the maximum figure that can be charged to customers on a variable dual-fuel rate for typical usage of gas and electricity for a six-month period.
Introduced in 2019 it is based on a number of factors including the wholesale cost of power in the previous six months.
Households will see their their energy bills rise to £1,971 a year after the regulator increased its price cap by 54 per cent.
Record increase in global gas prices- with wholesale prices quadrupling in the last year-have driven the increase.
This will impact default tariff customers who haven’t switched to a fixed deal and those who remain with their new supplier after their previous supplier exited the market.
Julia Jones, 54, from Radcliffe-on Trent, thinks energy companies are not to be blamed for the surge in costs.
She said: “The prices have to go up.
“You cannot expect a company to work at a loss.
“People will struggle for sure but this increase is inevitable for companies.”
Harold Kime, 79, is a pensioner living in Nottingham.
He thinks this new policy is the result of a lack of forethought by the government.
He said: “People like me are suffering the most.
“I have worked nearly 51 years, paying taxes and now I have to bear the cost of short terms measures.”
Rishi Sunak said a rebate of £350 will be applied to bills that will then be paid back over the next five years.
The Chancellor said: “In October all domestic electricity customers will receive a £200 discount on their bills.
“People will then have five years to repay that discount in equal instalments of £40 a year.”
Jonathan Brearley, chief executive of Ofgem, 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.
“Ofgem is working to stabilise the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future.”
Ofgem said it would tomorrow announce new measures to adjust the price cap more frequently than every six months “in exceptional circumstances” to ensure that it “still reflects the true cost of supplying energy”.