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Energy bills to spike by at least £139 for millions of UK households already struggling amid pandemic

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Energy bills are going to skyrocket by at least £139 for 15 million British families starting from October 1 due to soaring international gas prices, the UK’s energy regulator, Ofgem, has announced.

The cap on electricity and gas bills, which had been introduced in January 2019 to tackle what then-prime minister Theresa May called “rip-off” prices by energy companies, will be increased by 12 to 13% on the most widely used tariffs, the regulator said on Friday.

The bad news for Brits is that energy customers on default tariffs will have to dole out at least £1,277, with the annual price reaching £1,309 for those on prepayment deals.

🆕 Record gas prices drive up price cap by £139 – customers encouraged to contact supplier for support and switch to better deal if possible

👉https://t.co/eSoSCUJwsU#EnergyPriceCap pic.twitter.com/pUquQW1S38

— ofgem (@ofgem) August 6, 2021

The cap has had to be increased due to a 50% rise in wholesale energy costs over the past six months, which were driven by the soaring global gas prices and inflation at home, Ofgem said.

“We can’t ask companies to sell energy for less than it costs them to buy it,” Jonathan Brearley, the regulator’s chief executive, told reporters.

Consumer groups have sounded the alarm over the bad timing of the price hike, which will take effect in the autumn, when a furlough scheme to support workers during the pandemic, along with an increase in the Universal Credit benefit, are due to end.

The timing could create a “perfect storm” for families already in difficulty due to the pandemic, James Plunkett of Citizens Advice told the British media. “With bills rising and incomes falling, many families will find it hard to escape. For many, debt will be the inevitable consequence,” he said.

His views were echoed by Simon Francis, of the End Fuel Poverty Coalition, who pointed out that the news of the hike would be “no comfort to those now facing the stark choice between heating and eating”.

Meanwhile, the GMB union – members of which work in retail, security, schools, distribution, the utilities, social care, the National Health Service, the ambulance service and local government – blamed the UK government on Thursday for the “shambolic” energy policies, which it said are “piling pressure on the poorest households, while increasing our dependence on energy imports.”

“This should be the moment where the government starts taking its responsibilities seriously in tackling the climate crisis,” the union said, acknowledging the link between climate change and energy production and consumption.

Brearley acknowledged that higher energy bills were “never welcome” and the increase in prices would be “particularly difficult for many families still struggling with the impact of the pandemic.”

He advised people to contact their energy supplier to “access the help that’s available and, if possible, to shop around for a better deal.

Ofgem updates the cap twice a year, based on the formula that considers wholesale gas prices, energy suppliers’ network costs and the costs of government policies in the sector.

The measure means that companies are forbidden from charging more than the level of price cap. They are free to charge less, but since the previous cap update in February, many British wholesale gas contracts have reportedly doubled in price.

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