Energy prices will rise for millions of people in the UK in October, with the onset of cold weather.
Regulator Ofgem (Electricity and gas markets office) said the price cap for default local energy deals will be raised to cover the extra costs of suppliers.
The typical gas and electricity customer will see their bills increase from £139 to £1,277 per year.
Jonathan Brearley, CEO of Ofgem, told the BBC: " The reason for the rise in the price cap is the record increase in energy prices, not only for gas and electricity, but also for petrol and diesel.." He urged customers to price-research for the best tariffs and said big savings were made by switching to another energy supplier.
"You don't have to live with this tariff. The price cap is a point of return. We especially encourage every customer who is struggling to pay their bills to contact their supplier and access a wide range of help and services." said.
"This is a devastating increase," said Peter Smith, director of policy and advocacy at National Energy Action. Millions of household budgets have already been stretched to the limit, and this massive increase could not have come at a worse time."
Stating that the increasing wholesale costs are behind the increase, Ofgem added that the ceiling price application means that households will save between 75-100 liras per year. He pointed out that energy users could switch to a better deal to save up to £200. In addition, more targeted support should be provided to families at risk of falling into fuel poverty. Because this increase in energy prices will disproportionately affect those who are already struggling.
Who are affected?
The price cap, set twice a year by the regulator, affects 11 million households in England, Wales and Scotland. That accounts for about half of all UK households. Around four million prepayment meter customers will also be affected.
Why are prices increasing?
Domestic energy bills are linked to wholesale prices. When wholesale energy prices fell last summer following the first lockdown, Ofgem reduced the level of the cap by £84 for last winter. The cap impacting people who never or rarely change their deal, and also those on pre-payment meters who often have less choice. With many people continuing to work from home through the Covid-19, this big jump in utility bills will be an unwelcome extra pressure. Nevertheless, the prices continued to increase more than %50 since February.
Is switching the answer?
Energy users can change the tariff that they are already using or switch the suppliers to another one. They can do it from the energy comparison site. Some vulnerable people may not be able to do this action. OFGEM which is a charity provides the protection for these vulnerable people.