It is the largest rises in energy bills in over a decade
Energy bills for as many as 15m homes will increase by at least 15% from October as record-high gas costs mean the price cap will be lifted.
Ofgem, the gas and electricity markets regulator, said that 11m households on standard tariffs will see a 12% increase to £139 per year, while an additional four million will be faced with a 13% increase to £153.
It is the largest rise in energy bills over the last ten years which could squeeze families across the country, as the furlough scheme comes to an end.
Ofgem said the increase was the result of “a rise of over 50 per cent in energy costs over the last six months with gas prices hitting a record high as the world emerges from lockdown”.
“Gas prices have risen to a record high in Europe due to a recovery in global demand and tighter supplies. This is increasing the cost of heating homes and pushing up electricity prices,” the regulator added.
Ofgem chief executive Jonathan Brearley told the BBC that customers should shop around for the best possible deal, as there are opportunities to make significant savings.
“You don’t have to live with this tariff. The price cap is a backstop. We’d encourage any customer, particularly those struggling to pay their bills, to contact their supplier, and get access to a wide-range of help and support,” he added.
“Millions of household budgets are already stretched to the limit and this massive increase could not be coming at a worse time.”
The new rate will come into effect on October 1 for customers on their supplier’s default tariffs.
Domestic energy bills are directly linked to wholesale prices, the price at which energy businesses have to pay for gas and electricity.
After gas prices soared to a record high as the world economy recovered from the pandemic, wholesale prices jumped too, as there was a surge in demand for energy.
“A confluence of factors occurring at the same time has caused the recent bull run with record low gas storage, outages, continual/prolonged production issues and active Asian buying,” said Nick Campbell, a director at consultancy Inspired Energy.