Energy price cap: bills set to rise by almost £700 for millions

Ministers have intervened to try and soften the blow, offering households up to £350 off their bills this year, however people have been warned that high prices could be here to stay.

Regulator Ofgem said this morning that the annual cap will now be set at £1,971 from April, an increase of £693 on the previous maximum of £1,277.

For customers with prepayment meters the price cap will go up by £708 to £2,017, the regulator added.

The increase comes as Chancellor Rishi Sunak has announced that the Government will "step in" to help households manage the "incredibly tough" costs.

To "take the sting out" of the rises, Richmond MP Mr Sunak said that households in Britain would get a £200 up-front rebate on their energy bills from October.

The Government will provide the cash for this, but it wants the money back so will hike bills by £40 per year over the next five years from 2023 to recoup its cash.

If all goes to plan, wholesale energy prices will drop so households can pay back what they owe, without a major rise in bills.

Mr Sunak also promised a £150 council tax rebate for homes in bands A to D, something he said would cover around 80% of homes in England.

Boris Johnson has been under vast pressure to ease the cost-of-living crisis, with his leadership under threat over No 10 parties, but the new support is unlikely to be enough to prevent energy bills rising significantly for most people.

Ofgem chief executive Jonathan Brearley said: “We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can.

“The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem’s role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.”