UK energy regulators announce 80% price hike, warn it could get ‘significantly worse’ in 2023

The cost-of-living crisis in the UK took a turn for the worse after energy regulator Ofgem approved a £1,578 increase on the current average cap of £1,971.  

The energy price cap limits the standard charge energy suppliers can invoice their customers for on a combined energy and gas tariff on England, Scotland and Wales. Ofgem do review the cap through the year and can make changes in accordance with current market prices and other miscallaenous industry costs. 

The government have responded to the price hike by promising to pay a £400 ($470) grant to all households over a six-month period, starting from October. The government have also announced that they will make another £650 ($764) payment to the 8 million lowest income households in the UK.  

Some energy think-thank companies don’t believe this is enough. “A catastrophe is coming this winter as soaring energy bills risk causing serious physical and financial damage to families across Britain,” The Resolution Foundation’s senior economist Jonny Marshall said. “We are on course for thousands to see their energy cut off entirely, while millions will be unable to pay bills and build up unmanageable arrears.”

Ofgem will announce their next cap in January. Energy consultancy firm made a statement on Friday where they predicted that their estimate for the January cap is £5,387 ($6,328). This is an increase from their previous prediction of £4,650 ($5,462).  

Ofgem themselves have ruled out giving projections for the January cap, stating that the market is still “too volatile,” however they did caution that prices “could get significantly worse through 2023.” The new cap is expected to impact 85% of the population.