Ofgem CEO Jonathan Brearley said the rise would have a “huge impact” on households across the UK, with another rise expected in January reflecting significant price pressure in energy markets.
“It is clear that the new prime minister will have to move forward to deal with the impact of the price hikes that will occur in October and next year,” Briarly said.
Rising wholesale energy prices are hitting countries around the world.
As European governments raced to save gas, increase storage and cut bills, the British government was paralyzed by the race to replace Boris Johnson as prime minister on September 5th.
The two candidates argue over how to respond. Their proposals, which include a suspension of environmental fees or a sales tax cut, have been dismissed by analysts as too small to prevent an unprecedented blow to household budgets.
Finance Minister Nadhim Zahavi said on Friday he was working on a plan to prepare for the next government, although he acknowledged that the new price ceiling would cause stress and anxiety for millions.
Ofgem said it was not giving forecasts for January when the new cap would take effect because the market remains too volatile, but said the winter gas market meant prices could get “significantly worse” until 2023.
Electricity bills have soared this year after wholesale gas and electricity prices, already rising since the pandemic, surged following Russia’s invasion of Ukraine and Moscow’s move to cut gas exports to Europe.
The new average electricity and gas bill for 24 million households means electricity bills will nearly triple from last October, when they averaged £1,277, a major driver of inflation to a 40-year high.