British energy bills will increase by 80% to an average of 3,549 pounds ($4,188) a year starting in October, according to regulator Ofgem, who called the situation a "crisis" that required immediate and strong government action to resolve.
KNUTSFORD, UNITED KINGDOM - FEBRUARY 03: In this photo illustration a domestic electric kettle emits steam and vapour on February 07, 2022 in Knutsford, United Kingdom. The energy regulator OFGEM has brought forward the announcement of the increase in the energy price cap to reflect the record high gas energy market prices caused by the global crisis in supply.
Record High Gas Prices
As wholesale gas prices reached record highs due to Russia restricting supply to Europe, Ofgem CEO Jonathan Brearley claimed that the hike would have a significant impact on consumers throughout Britain. He also predicted that another spike would likely occur in January.
According to Reuter's report on Friday, the future of businesses across the nation is in jeopardy as rising petrol costs threaten to push millions of households into fuel poverty, where they are unable to spend money on anything other than necessities.
Britain's approach to the crisis has been hindered by the contest to succeed Boris Johnson as prime minister, despite inflation reaching a 40-year high and the Bank of England foreseeing a protracted recession.
Brearley from Ofgem advised Britain's next leader, either Rishi Sunak or Liz Truss, to take action as soon as they assumed office on September 5.
The price increases in Britain, which depends heavily on gas, are remarkably staggering.
In 2018, the average yearly bill was 1,277 pounds ($1509); this year, it will be 3,549 pounds ($4195), according to prominent forecaster Cornwall Insight, who also predicted that prices would likely skyrocket once more in 2023.
According to Cornwall Insight, home bills could reach about 500 pounds ($592) per month for gas and electricity, which for many people is more than their rent or mortgage.
Cornwall Insight also anticipates expenses to be just under 6,000 pounds ($7098) through next year.
Read also: UK Blackouts Expected To Happen This Winter; National Grid Suggests Continuous EU Energy Imports
National Emergency
Reuters noted that wholesale price hikes are passed on to British consumers via the price cap, which is calculated every three months to prevent energy suppliers from making excessive profits but is presently the lowest price offered to 24 million households.
Due to the industry's instability, around 30 energy retailers had gone out of business, and Ofgem reported that the majority of domestic suppliers were losing money.
Sunak and Truss have proposed suspending environmental fees or reducing a sales tax, but experts have condemned these ideas as being far too insufficient to prevent the impact on household finances.
The country, according to the opposition Labour Party, could not continue to wait. Finance spokesman Rachel Reeves declared that the situation is a "national emergency" which calls for a freeze on bills.
The market was too unpredictable, according to Ofgem, to estimate the next cap that will go into force in January, but the winter gas market conditions suggested that prices might get much worse through 2023.
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Written by Joaquin Victor Tacla
