MPs have called on the government to take urgent action to help households amid warnings the energy price cap could soar to £3,244 in October.
Millions of families will drop into “unmanageable debt” as a result of increasing costs, MPs on the influential Commons business committee said.
They urged the government to immediately change their out-of-date energy bill support for households and accused the energy regulator Ofgem of being “negligent”.
It comes amid forecasts that the energy price cap - the maximum amount a supplier can charge the average customer - could soar to £3,244 in October, with further rises expected in January.
“Once again, the energy crisis is racing ahead of the government,” said Darren Jones, the chair of the business, energy and industrial strategy committee.
“To prevent millions from dropping into unmanageable debt it’s imperative that the support package is updated and implemented before October, when the squeeze will become a full-on throttling of household finances and further tip the economy towards recession.”
The committee has been hearing from experts, ministers and industry insiders for months.
“We were told by a number of witnesses, ‘if you think things are bad now, you’ve not seen anything yet’,” Jones said.
“This winter is going to be extremely difficult for family finances and it’s therefore critical that public funds are better targeted to those who need it the most.”
The cross party group of MPs argued that a massive insulation drive needs to be launched “urgently” to help permanently bring down bills.
They have also asked ministers to consider abandoning the energy price cap in favour of a discounted social tariff for the most vulnerable.
The MPs said that there were problems with the support that former chancellor Rishi Sunak had promised to bill payers, including multiple payments for second home owners.
When Sunak announced the help, the energy price cap was forecast to rise to around £2,800 in October. Now the latest forecasts set the next price cap at £3,244.
The package gave £400 energy bill discounts to all households, £650 to another eight million low-income households, £150 for those on disability benefits and £300 for pensioners.
But since then problems have ramped up, with fresh predictions of even more misery to come.
The committee also warned that £94 that will be added to bills because 30 energy suppliers have failed in a little over a year.
It accused Ofgem, the regulator, of “incompetence over many years” which allowed poorly run and backed companies to start energy companies.
When the situation becomes difficult they are more likely to fail, with the cost of their collapse spread across all households in Britain.
“Ofgem failed to use its existing powers and didn’t bring action against energy suppliers even when it was clear that they should have done,” the committee said.
It added: “Negligent energy regulator Ofgem enabled now bankrupt energy firms and inexperienced CEOs to increase energy bills further.”
Ofgem said the massive gas price spike “would have resulted in market exits under almost any regulatory system”, but admitted its previous regime was “not robust enough” and this contributed to some suppliers failing.
“No regulator can, or should, guarantee companies will not fail in a competitive market, but we are working hard to reform the entire market as well as closely scrutinising and holding individual energy suppliers to account, to further strengthen the regulatory regime,” it said.
The department for business said: “No national government can control global inflationary pressures; however, we have introduced an extraordinary package of support to help households.”
MPs also concluded that while the government can step in with support now as gas bills soar, in the long run it needs to reduce the demand for energy.