Energy price cap hike a 'sobering milestone' as energy giants make record profits

The average household energy bill will now hit £3,549 from October.  Credit: PA

The energy price cap rising by 80% is another sobering milestone in this cost of living crisis which will get worse before it gets better.

The number of people in Wales living in fuel poverty - those having to spend more than 10% of their income on energy - will increase following Friday's announcement. The average household energy bill will now hit £3,549 from October. 

The most recent figures show 98% of all lower-income Welsh households are in fuel poverty - so this development will crank up the pressure on family finances across the country.

The pace and scale of the rises are just too great and too fast for households to save enough to cover the bills. The majority of people in Wales are already cutting back on energy use but even these measures will not be enough to prevent more people falling into fuel poverty.

All this is against the backdrop of the energy companies making record profits. This week some offered to create or extend their own energy hardship funds. However there are calls for the industry to shoulder more of the burden which is currently falling on consumers.

Ofgem's energy price cap is a system introduced in 2019 to protect households from the shocks of volatile energy prices. However, it doesn't seem to be offering much protection right now and critics have said the system is no longer fit for purpose.

At a political level the debate continues about how best to tackle the energy price rises which are fuelling the cost of living. There are calls on the chancellor for Covid-style support and there are promises that help is coming. However, with a Conservative leadership contest underway, Labour argue there is no one at the helm at this critical time.

Whist the politicians argue about how best to tackle the issue - everything from freezing the cap, extending the windfall tax or even creating an energy deficit fund to help those struggling the most - households fear how they will cope in the winter.There are 36 days between now and the date the newest price cap comes into force, on October 1. Both the Welsh Government and either Rishi Sunak or Liz Truss, Conservative leadership contenders face some big decisions. People are struggling to pay their bills now, the economy is slowing and we’re towards recession.

Chancellor Nadhim Zahawi said he is working "flat out" to develop options of further support. The question now is what that support might be, and how soon it will come.