Cost of British power now five times that Down Under

British households have been hit with a fearsome 80 per cent increase in the prices of electricity and gas.

Nadhim Zahawi says he knows the new prices will cause ‘stress and anxiety for many’. Picture: AFP

British households have been hit with a fearsome 80 per cent ­increase in the prices of electricity and gas, after the regulator Ofgem released a new price cap on Friday.

The incoming prime minister, either Foreign Secretary Liz Truss or former chancellor of the exchequer Rishi Sunak, will be pressured to implement immediate steps to quell the fear and anger of people who have already cut back usage to minimal levels.

Businesses, which fall outside of the cap, are already under enormous stress and some small companies had begun limiting opening hours to try to deal with the energy hike.

Previously announced rebates to households of £400 ($678) will be swallowed up in just a few weeks of the new prices, which come into effect in October.

Caroline Flint, the government’s fuel poverty adviser, said: “The fear is not so much that people will be disconnected by energy companies but that they will disconnect themselves.”

Chancellor of the Exchequer Nadhim Zahawi said he knew the new prices would cause “stress and anxiety for many”.

“While (Russian President Vladimir) Putin is driving up ­energy prices in revenge for our support of Ukraine’s brave struggle for freedom, I am working flat out to develop options for further support,” he said. “This will mean the incoming prime minister can hit the ground running and deliver support to those who need it most, as soon as possible.”

Ms Truss wants to look beyond handouts and increase the supply of energy.

“The fact is that we haven’t been getting enough gas out of the North Sea, we haven’t been moving fast enough with nuclear, we haven’t been doing enough on renewable energy as well,” she said.

Mr Sunak promised to cut VAT on domestic energy and ­increase support for vulnerable and low-income earners.

The price cap, which is the ­average annual energy cost for a two-bedroom house, has soared to £3549, up from £1971 in February. The new figure is nearly three times the price imposed just 12 months ago.

The formula is based on the previous month’s wholesale prices, which have skyrocketed ­because of Russia’s tightening of supply, and reduced nuclear generation from France.

In practice, it means British households will pay 52p ($1) per kWh of gas and 15p ($0.28) kW of gas.

This is four to five-fold the electricity rate paid by Australian households.

Analysts have already foreshadowed that the British cap will increase further in January and next April, with a further doubling of prices. Ofgem says that the wholesale price for gas has ­increased more than 180 per cent since February and the wholesale price for electricity has tripled in the same period.

North Sea’s biggest oil and gas producer, Harbour Energy, has reported an extraordinary 10-fold increase in profit as countries across Europe try to stockpile ­energy for winter and move away from Russian energy supplies.

Simon Oscroft, co-founder of So Energy, told BBC Radio that prices might have to rise to £5000 and higher next year.

“The real cost of energy this winter if we were to buy energy at today’s prices is actually a lot more than the price cap and suppliers will be losing money,” he said.

Labour shadow chancellor ­Rachel Reeves said the astronomical rises would strike fear into the heart of families, forcing many to make “unthinkable choices this winter’’. She has called for a freeze on prices in winter, funded in part by windfall taxes on oil and gas companies.