The “severity of the energy crisis” is now becoming a reality for 22m households, argued Justina Miltienyte, energy policy expert at Uswitch, following Ofgem’s £700 price hike to annual bills.
The market regulator has announced the consumer price cap will rise by 54 per cent to nearly £2,000 per year, deepening financial pressures on low-income energy users.
Chancellor Rishi Sunak has since announced plans to shave up to £350 off energy bills through a £9bn loan scheme fuelled by public money and a council tax rebate for 80 per cent of households from October.
Miltienyte said: “While the government will try to soften the impact of this rise, there’s no getting away from the fact that this is going to have damaging consequences for households
Dr Craig Lowrey, senior consultant at Cornwall Insight argued it was “unfortunately inevitable” that the default tariff cap would rise amid volatile gas and electricity markets.”
He also slammed the price cap and criticised the government and Ofgem’s commitment to the mechanism, which he believed has failed to shield consumers from higher bills.
Dr Lowrey explained: “The cap was never meant to be a permanent solution and today has shown that rather than protecting customers, the impact in the wholesale market over the last 12 months was simply deferred, leading to this significant increase announced today.”
While the price cap has prevented suppliers from passing on soaring wholesale prices to consumers, 26 suppliers have collapsed since September, with Bulb Energy remaining propped up by £1.8bn in public money.
Meanwhile, Labour reignited calls for a £1.2bn windfall tax on North Sea fossil fuel companies to provide a £200 saving to household bills, which the Adam Smith Institute has described as “economically illiterate.”