Emma Pinchbeck, chief executive of Energy UK, believes prices could rise much further than the predicted 50 percent hike in the consumer price cap expect to come into place this spring. Ms Pinchbeck, who heads the country’s trade body for energy suppliers, warned that successive hikes in the consumer price cap were very plausible “if nothing changes”.
Should this eventually come to pass, annual household bills potentially could reach £2,400 per by the end of the year, she said.
This is double the current cap.
She added: “We haven’t seen anything like this, not in my career or in any of the people who sit on my board.”
The huge rise has been driven by the spiralling cost of wholesale gas – which increased by 500 percent last year alone at one point.
This prompted numerous energy companies – which supplied millions of UK households – to go to the wall because the price cap forbade them from passing all of this cost on.
Industry regular Ofgem will meet on February 7 to discuss raising the cap – which currently limits household bills to £1,277 per year for average use.
Commentators are warning households to brace themselves for a £700 increase, which would push annual fees up to £2,000.
And while squeezed households – already battling a cost of living crisis – will be wincing at the hike, Ms Pinchbeck warned that it may be the first of several.
She said that while wholesale gas prices have begun to fall “they are still three times higher than we expect to see at this time of the year”.
And she warned that this dire situation is likely to be “enduring”.
In an effort to mitigate soaring prices, the Government is reportedly considering numerous measures to help under-pressure households.
One includes expanding the Warm Home Discount scheme while cutting VAT and potentially creating a new scheme where Downing Street lends public money to suppliers are also said to be being looked at.
Even price comparison website Uswitch called on Boris Johnson’s administration to take action.
Richard Neudegg, head of regulation at Uswitch, said: “The government needs to do much more, and fast, to scale up its targeted support for vulnerable households in a way that reflects the cost increases coming in April.
“Now we are in the depths of winter, and people are already struggling with their bills, it is time for the Government to act.”
But not everyone agrees.
Free-market think tank The Adam Smith Institute (ASI) believes that more intervention will solve nothing.
John Macdonald, ASI’s director of strategy added: “The Government has deprived the market of its ability to operate under pressure.
“The price cap forces providers to sell at or near a loss, stifling competition and distorting the price signals that allow consumption and investment to shift with scarcity.”
The news emerged as it was revealed that Merseyside and North Wales have the highest electricity bills in the UK, paying over £800 on average a year.
Research by energy experts Boiler Central found that households in these areas were shelling out £100 more than Northern Ireland – the area with the cheapest electricity costs.