Energy prices for most households in Britain will rise by 80% from October, taking a typical bill to a record £3,549 year.
The increase equates to bills of almost £300 a month on average for a typical household.
Ofgem confirmed this morning that it was increasing the energy price cap, which limits tariffs for 24 million households, as a result of soaring wholesale gas and electricity costs.
The rise will apply to almost 20 million households on standard variable tariffs, with an annual bill hitting £3,549 based on typical usage, up from £1,971 at present. Prices for a further 4.5million households with pre-payment meters will rise even higher, taking their typical annual bill to £3,608 a year.
Jonathan Brearley, Ofgem chief executive, said: “The price of energy has reached record levels driven by an aggressive economic act by the Russian state.
"They have slowly and deliberately turned off the gas supplies to Europe causing harm to our households, businesses and wider economy. Ofgem has no choice but to reflect these cost increases in the price cap.”
The UK Government will today seek to reassure the public that help is on the way, with the new Prime Minister set to announce a package of help within days of taking office.
The new Prime Minister is set to announce help for households with their energy bills within days of taking office.
Chancellor Nadhim Zahawi is expected to say that measures will be announced "as soon as possible" after the winner of the Tory leadership contest is announced on September 5.
Commenting on what Mr Zahawi is expected to say, a Treasury source said: “From day one the Chancellor has been working flat out to develop options for further support.
"This will mean the incoming Prime Minister can hit the ground running and deliver support to those who need it most, as soon as possible.”
Business support
In a letter to the UK Government Secretary of State for BEIS, Deputy First Minister John Swinney has urged the UK Government to back the calls of the Chambers of Commerce network for urgent support to tackle the cost of doing business crisis.
He wrote: "In regular dialogue business organisations and leaders tell us that these cost pressures arise from: direct energy and fuel cost increases, consequential impacts on supply chain and materials, rising staffing costs, exacerbated by some skills shortages/competition and employee inflationary pressures, emerging anecdotal evidence of rental increases for premises and falling consumer demand. More recently they say that some businesses are beginning to have conversations about trading down and generally reducing production capacity.
"We are already seeing growing pressure on cash-flow, leading to less availability of funding for crucial investment in growth activities and, without further intervention, the business organisations say they expect a rise in business failures."
He has asked the UK Government to consider:
- The introduction of Energy Price caps, particularly for micros and SMEs;
- A VAT reduction on business energy bill;
- An expansion of shortage occupation lists to enable improvements in filling vacancies from overseas;
- Support in handling business debt including extension of CBILS and other loans;
- Setting a lower overall level of VAT; and
- Pausing the National Insurance increase and implementation of the Social Care Levy.