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Energy price cap expected to soar to ‘region of £2,800’ in October, Ofgem chief proclaims | Personal Finance | Finance

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Jonathan Brearley, the chief executive of industry regulator Ofgem, informed the the Business, Energy and Industrial Strategy Committee earlier of the expected increase. Mr Brearly revealed he’s expecting a rise to the energy price cap in October “within the region of £2,800”. Appearing in front of the committee, the regulator head said: “The worth changes are genuinely a once in a generation event not seen for the reason that Nineteen Seventies.” This latest update from Ofgem might be concerning for nearly all of households who’re already within the midst of experiencing an increase of £693 to their annual energy bill.

Mr Brearley told the Business, Energy and Industrial Strategy Committee: “I’m afraid to say conditions have worsened in the worldwide gas market since Russia’s invasion of Ukraine. Gas prices are higher and highly volatile.

“At times they’ve now reached over 10 times their normal level. I do know this can be a very distressing time for purchasers but I do have to be clear with this committee, with customers and with the federal government in regards to the likely price implications for October.

“Due to this fact later today I might be writing to the Chancellor to provide him our latest estimates of the value cap uplift.

“That is uncertain, we’re only part way through the value cap window, but we predict a price cap in October within the region of £2,800.”

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This latest update from Ofgem might be concerning for nearly all of households who’re already within the midst of experiencing an increase of £693 to their annual energy bill.

Recently, the regulator announced plans to update its price cap forecast quarterly as an alternative of twice a 12 months.

Nonetheless, consumers will still must wait until October 2022 to get confirmation about how high their bills will go.

During his appearance in front of the committee, Mr Brearley apologised on behalf of Ofgem for not doing enough to forestall the value cap from reaching this amount.

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In October 2021, the energy price cap sat at £1,277 which implies households will likely see their bill double inside the space of 1 12 months.

On top of this, the regulator head warned that energy bills are very more likely to go even higher than this staggering figure.

The Ofgem chief executive added: “We’re within the very early stages of this, that number will undoubtedly go up.”

Energy bill increases are being compounded by the growing rate of inflation which hit a 40-year high of nine percent last week.

Consequently of the April increase, there are 6.5 million people in fuel poverty.

Are you apprehensive in regards to the energy price cap rising? If you should share your story, please get in contact via personal.finance@reachplc.com. Unfortunately, we cannot reply to every email.

“We do see that number going up significantly,” Mr Brearley warned.

When pressed further, he said the number could rise to “double digits”, adding it might be around 12 million households.

Moreover, the regulator chief warned of the risks posed by consumers “disconnecting” and being unable to pay for his or her bills.

Mr Brearley added: “We’re already seeing customers self-disconnecting. That is going to be a giant and difficult, problem to handle.

“That’s why we want not only Ofgem to do its job, not only the industries to do its job, not only the NGOs to do its job but we want Government to step in.”

Reacting to the news on Twitter, former pensions minister and finance expert Steve Webb said: “This can be a huge increase, on top of the one which has already happened.

“Government may say that ‘work’ is the easiest way out of the fee of living crisis, but what if you happen to are elderly or unable to work – people cannot wait until next April for a catch-up increase.”

Justina Miltienyte, head of policy at Uswitch.com, comments: “This admission from Ofgem confirms the worst fears of everyone who’s currently struggling to pay their energy bill. Although now we have long expected the value cap will rise again in October, that is the primary time the regulator has estimated how high it could soar.

“The ultimate figure continues to be uncertain as now we have a couple of months left before the announcement, so it could go further up or down, depending in the marketplace volatility.

“This revelation by Ofgem might be especially worrying for those on the bottom incomes who’re already struggling, and the necessity for more support couldn’t be more urgent.

“Nearly 1 / 4 of consumers are already in debt to their supplier[1], and are facing financial pressures from all sides. Now’s the time for the federal government to act and put together a comprehensive package of help for probably the most vulnerable before it is just too late.”

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