Ofgem raises energy price cap to £3,549

theguardian.com:

Households in Great Britain face a leap in energy bills from October after the regulator raised the maximum that suppliers can charge to £3,549 a year.

In a blow for hard-pressed consumers already struggling with soaring inflation, Ofgem approved the £1,578 increase on the current price cap of £1,971 for the average dual-fuel tariff – a rise of 80%.

The announcement comes as households attempt to budget for a tough winter. Soaring energy bills have fuelled rampant inflation, which breached 10% last month and is forecast by some economiststo climb to 18% from January.

Ofgem’s announcement will pile further pressure on the government to urgently introduce further measures to help households this winter. The victor in the Tory leadership contest between Liz Truss and Rishi Sunak is expected to announce a plan shortly after the race’s conclusion on 5 September.

The price cap was introduced in 2019 in an effort to protect customers from being ripped off. However, rising wholesale gas costs caused a string of energy suppliers to go bust as they were squeezed by the cap, unable to pass on those costs to customers.

Russia’s invasion of Ukraine has further pushed up wholesale gas prices, forcing Ofgem to increase the cap in response. The impact has been to more than double costs for consumers, with the cap having risen from £1,277 in October 2021.

Earlier this month, the energy regulator confirmed the cap would be reviewed quarterly rather than every six months. Ofgem said the change would allow it to “adjust much more quickly” to volatility in the market.

The next cap will be introduced in January, when it is feared that bills could reach as high as £5,000. Some industry watchers have questioned whether the cap is viable in the long