ENERGY price regulator Ofgem is facing legal action for failing to protect millions of vulnerable customers from draconian increases in their gas and electricity bills.

Campaign group the Good Law Project (GLP) said today that the regulator has failed to use its statutory powers to introduce a social tariff of lower charges for vulnerable people ahead of its increase in the cap on prices energy companies can charge.

GLP is warning that it will take legal action against Ofgem unless the regulator acts to protect the poor when the next increase is announced.

In April, Ofgem raised the cap on energy bills by 54 per cent, an increase of £696, lifting annual average bills for direct debit customers from £1,277 to £1,971 a year.

Customers paying the more expensive prepayment tariff saw annual bills increase by £708 from £1,309 to £2,017.

The increases affected 22 million customers.

The next Ofgem increase is expected to be announced on August 26, taking effect in October.

Energy industry price analyst Cornwall Insight anticipates that average bills will then increase to £3,582, a 180 per cent increase on the same time last year.

Ofgem also revealed this month that it will announce price cap levels every three months instead of every six months, meaning that a further increase is expected in January.

Cornwall Insight expects average annual bills to then hit £4,266.

GLP, Fuel Poverty Action and Scotland’s Affordable Warmth Group have written to Ofgem warning the regulator that it will face legal action unless a social tariff of lower prices is introduced to protect the poor and vulnerable by August 26.

GLP director Jo Maugham said: “Ofgem has the power to protect vulnerable people from the devastating increases in energy costs, and we think they should use them.

“Having failed to properly assess the risks, they don’t seem to be planning any steps to protect vulnerable groups.

“We hope we’re wrong and that Ofgem is doing all this behind the scenes. But we don’t want to wait for their August 26 announcement to find out.

“We’ve put them on notice that if they don’t properly comply with their legal duties before announcing the next increase, we’ll be ready to challenge it straight away.”

An estimated three million homes in Britain are already estimated to be unable to pay their fuel bills.