British energy bills will rise 80 per cent to an average of £3,549 a year from October, regulator Ofgem said on Friday, calling it a "crisis" that needed to be tackled by urgent and decisive government action.
Ofgem CEO Jonathan Brearley said the rise would have a "massive impact" on households across Britain, and another increase was likely in January, reflecting significant pricing pressure in energy markets.
He said Britain's next prime minister - either Liz Truss or Rishi Sunak - needed to take immediate action once in office next month.
"It's clear the new Prime Minister will need to act further to tackle the impact of the price rises that are coming in October and next year," Brearley said.
"The response will need to match the scale of the crisis we have before us."
The news sparked outcry from charities who said families faced one of the "bleakest Christmases" for years, with UK inflation already in double-digits and forecast to strike 13 percent in the coming months due to runaway energy bills.
The near-doubling in the cap will likely tip millions into fuel poverty, forced to choose between heating or eating, according to anti-poverty experts.
Britain is already suffering from its highest inflation rate since 1982 and is predicted to enter recession later this year.
"We know the massive impact this price cap increase will have on households across Britain and the difficult decisions consumers will now have to make," Brearley added.
"I talk to customers regularly and I know that today's news will be very worrying for many."
Rising wholesale energy prices are hitting countries around the world.
While European governments have sought to conserve gas, increase storage and cut bills, Britain's government has been paralysed by the race to replace Boris Johnson as prime minister on Sept. 5.
The two candidates have clashed over how to respond. Their proposals, which include suspending environmental levies or cutting a sales tax, have been dismissed by analysts as too little to avert the unprecedented hit to household budgets.
Chancellor Nadhim Zahawi said on Friday he was working on a plan to be ready for the next government, although he acknowledged the new price cap would cause stress and anxiety for millions.
Gas comprises a major part of Britain's energy mix, with tens of millions of homes relying on gas-powered boilers for their heating.
Household and business consumers, energy suppliers and opposition politicians are clamouring for urgent government action to do more to avoid putting the most vulnerable in desperate situations.
Ofgem said it was not giving projections for January when a new cap will take effect because the market remained too volatile, but it said the market for gas in winter means that prices could get "significantly worse" through 2023.
Energy bills have soared this year after wholesale gas and power prices, already rising after the pandemic, surged following Russia's invasion of Ukraine and Moscow's move to curtail gas exports to Europe.
The new average bill for electricity and gas for 24 million households means energy bills will have almost trebled from October last year when they were an average of £1,277, a major factor in inflation rising to a 40-year high.
The University of York has estimated 58 percent of UK households are at risk of fuel poverty by next year.
The crisis is forecast to worsen from next January, when average bills could top £5,000 according to some projections as Ofgem updates the cap every three months, rather than the previous norm of twice a year.
The leader of the main opposition Labour party, Keir Starmer, has called for a freeze in energy bills at the current cap level.
Outgoing premier Johnson has vowed to leave major fiscal decisions to his successor.
Simon Hannah
