Gas and electricity bills for millions of Britons could soar to a record £2,000-a-year from next year as the energy price cap is set to be doubled in the coming months, households have been warned. 

From April, Households may see an increase of 56 percent in their energy bills due to unprecedented wholesale costs that force Ofgem into raising the price cap. 

Investment bank Investec has said that Britain’s energy price cap will have to be lifted to £1,995-a-year per household from April when the regulator next alters the limit, reported the Financial Times. 

The current cap is set at £1,277-a-year per household since October, meaning Britons could have to may more than £700 extra annually unless the government or Ofgem provide ‘mitigating actions’. 

Energy market plunged into chaos following a 500% increase in wholesale gas prices within 12 months. It was caused by increased energy demand, low Russian gas exports and low French gas supply. 

More than 4 million homes have been affected by the collapse of 25 providers since the start of the summer. 

Gas and electricity bills for millions of Britons could soar to a record £2,000-a-year from next year as the energy price cap is set to be doubled in the coming months, households have been warned (stock image)

Gas and electricity bills for millions of Britons could soar to a record £2,000-a-year from next year as the energy price cap is set to be doubled in the coming months, households have been warned (stock image) 

Twenty-five providers have collapsed since the end of the summer, affecting more than four million households

More than 4 million homes have been affected by the collapse of 25 providers since the start of the summer. 

These are the 25 UK energy companies that have failed so far 

  • Neon Energy Limited
  • Social Energy Supply Ltd
  • CNG Energy
  • Omni Energy Limited 
  • MA Energy Limited
  • Zebra Power Limited
  • Ampoweruk Ltd
  • Bluegreen Energy Services Limited 
  • GOTO Energy Limited 
  • Daligas Limited 
  • Pure Planet 
  • Colorado Energy
  • Igloo Energy 
  • Symbio Energy 
  • Enstroga 
  • Avro Energy
  • Green Supplier Limited
  • Utility Point
  • People’s Energy 
  • PFP Energy
  • MoneyPlus Energy
  • HUB Energy
  • Entice Energy
  • Orb Energy
  • Zog Energy 

Bulb was the biggest company to fail so far. Bulb’s 1.7million households were its top source of energy. 

Martin Young, an analyst at Investec, told The Times: ‘With wholesale commodity prices remaining elevated, we suggest that the tariff cap could jump by 56 per cent reaching £2,000 [a year]For the Summer 2022 Period. 

Mr Young suggested that higher wholesale energy costs would account for £560 of the rise, while £72 would reflect the cost of supplier failures.

‘[It will come as]Many people were shocked by the news, which had implications for inflation, fuel poverty and discretionary spending,” stated Mr Young to The Times. 

Additionally, he told the FT that an increase in this scale is most likely to have political consequences. 

Just days ago, experts had warned families that their monthly energy bills could rise if they don’t change the price cap.

The cap protects more than 15 million households and limits the amount of variable contracts that can be charged customers. With no fixed-rate deals available, many more households could move to standard tariffs in the coming months. 

Ofgem reviews the cap, currently £1,277 a year for the average household, twice a year. 

Consultation on possible changes ends in February. The proposed changes could be made at the beginning April when the price caps are set to increase. 

Energy bosses earlier this month blamed Ofgem’s price cap for causing ‘huge price increases’ after a fuel poverty charity warned that an increase to the cap next Spring could see the cost of heating the average home doubling since last April. 

Bill Bullen (founder and CEO, Utilita’s energy supplier) lashed out at Ofgem during the crisis. He stated that “we can’t ignore the fact that this is because of some very serious regulatory failures”. 

Energy UK, the trade association representing energy companies in the UK, stated that government can help to reduce the April increase by spreading the costs for rescuing suppliers going bankrupt. 

Energy bosses have blamed 'huge price increases' on 'pretty serious regulatory failures' by Ofgem (stock image)

Ofgem has been blamed for the ‘huge price hikes’ that energy executives have accused of being caused by a series of regulatory errors (stock image).

Audrey Gallacher from Energy UK’s retail department told the FT, “Right now, people have been protected against those wholesale price hikes, but we really are worried about what will happen in April.”  

Many households in Britain pay gas and electricity in one deal. Ofgem has a price cap that protects those paying standard tariffs. 

To delay the effects of rising prices on household bills, the state regulator instituted the cap. It was originally set at the lowest possible level last October, when energy prices had been low. But it has since risen twice and seen its greatest increase in two months. 

Many energy companies have been forced to close their doors in the last few months because Ofgem has set a price limit that makes it difficult for them to compete. The regime prevents suppliers passing higher costs on to customers and renders them insolvent. 

Their customers were moved to tariffs with other suppliers according to the price cap. This means that hundreds of thousands of fixed rate users who had hoped for protection from rising prices, will also now be affected by the April cap. 

A series of global issues have caused energy prices to rise globally. A reopening economy has led to increased demand and higher Chinese demand. It also coincided with a less windy summer. 

Analysists Cornwall Insight also predicted an increase to £1,925 a year per household from April, while Citizens Advice earlier this month warned that the bills could rise to £1,891.     

Thomas Rodgers from Icis European Gas Analysis stated to the Times that Wholesale gas prices are rising because of ‘colder weather across the Continent draining existing low stocks’ in storage. 

The November 15th, 2015 saw wholesale energy prices reach their highest point in three years. This added pressure is a great help for already stressed firms.

Low wind speeds prior to the arrival of Storm Arwen were blamed for pushing wholesale energy prices for the peak period between 5pm and 6pm over £2,000 per megawatt hour. This was the second occasion they had exceeded this level since 2018.

Due to these low winds, the UK power grid had to switch to coal and gas for powering homes and business. 

Russia is a significant supplier of European gas and has been accused in limiting supply to pressure the EU into approving a pipeline that bypasses Ukraine. Experts warn that the move could impact Ukraine which is already a source of tension between Russia, China and the West. 

After Russian gas flow to Germany resumed, wholesale gas prices in Europe fell last month. Moscow promised to improve supplies and alleviate concerns over shortages.

Moscow began pumping gas again to Germany via the Yamal pipeline in Siberia. This was just a day after an export halt that had led to higher prices.

Russia supplies a third Europe’s natural gas, and Russia’s supply intentions are crucial at a moment when spot prices have risen sharply. This has highlighted Europe’s dependence on Moscow to provide its energy. 

Russian President Vladimir Putin directed Gazprom, a state gas company (GAZP.MM), to boost supplies to Europe this month and to rebuild its stocks there after domestic storage tanks have been refilled.

Moscow denies withholding gas supplies for Europe in order to pressure German regulators into approving gas shipments via the Nord Stream 2 pipeline under the Baltic Sea.

Germany will have until January 1st to sign off on the project.

According to a spokesperson for the government, “Throughout this unprecedented rise in global gas prices our primary goal has been protection of consumers.”