THE energy price cap rise which is to hit the bills of millions of families across the UK from today is just the start - with a “ticking time bomb” ready to explode come next year.
The warning comes as Ofgem’s price cap on energy bills rises by a record £139 - taking average bills to £1277.
The rise comes after another on April 1, meaning 2021 is the first year to have seen two consecutive rises, and the first to have a rise brought in before winter.
Pre-payment customers, often the worst off in society, will today see average costs rise by £153, from £1156 to £1309.
However, industry figures have warned that the next potential price cap rise, which Ofgem has a chance to bring in from April 1, 2022, will see records broken again.
READ MORE: Ofgem chief casts doubt on Tory claims that gas price crisis is temporary
This is due to a lag in the price cap’s introduction, meaning the new, higher rates brought in today do not fully reflect the 270% rise in wholesale gas prices since the beginning of the year.
Dr Craig Lowrey, a senior consultant with market research firm Cornwall Insight, said: “Although the winter 2021-22 cap was a new record ... modelling indicates that – given the extent of the increases in the wholesale market and the manner in which the cap is set – this is set to be surpassed by that for summer 2022.”
Lowrey’s warning comes alongside that of Richard Neudegg, head of regulation at Uswitch.com.
Neudegg said: “The increase that standard variable tariff customers will see on their bills from October only reflects the start of the rise in wholesale energy prices and does not include the full hike that caused the recent crisis.
“There is a retrospective lag to the price cap system which means that people won’t have the current spikes in wholesale costs passed onto them until next April, so we have a ticking time bomb on our hands.
“The Government needs to act quickly to provide better protection for the most vulnerable over the coming months. Even before a likely third consecutive hike, the targeted support available to the people who need it the most has been rendered meaningless by this price increase.”
Business Secretary Kwasi Kwarteng has said that the current energy price cap will remain in place over winter despite soaring wholesale prices and promised “there’s absolutely no question of the lights going out or people being unable to heat their homes.”
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here