The energy price cap is expected to rise in October to around £2,800. The stark warning came from Ofgem chief executive Jonathan Brearley who was speaking to the Business, Energy and Industrial Strategy Committee.
He said: “I am afraid to say conditions have worsened in the global gas market since Russia’s invasion of Ukraine. Gas prices are higher and highly volatile. At times they have now reached over 10 times their normal level
“I know this is a very distressing time for customers but I do need to be clear with this committee, with customers and with the government about the likely price implications for October.
“Therefore later today I will be writing to the Chancellor to give him our latest estimates of the price cap uplift.
“This is uncertain, we are only part way through the price cap window, but we are expecting a price cap in October in the region of £2,800.”
He also said future scenarios could include energy prices going even further up if Russia further disrupted gas supplies. He said: “The price changes we have seen in the gas market are genuinely a once-in-a-generation event not seen since the oil crisis of the 1970s.
“In any conceivable circumstances there would have been supplier failure. However, it is clear to me and it is clear to the current Ofgem board that, looking over all of our institution’s history, had financial controls been in place sooner we’d have likely seen fewer suppliers exit the market, and for that on behalf of Ofgem and its board I would like to apologise.”
The energy price cap – which is now at a record £1,971 per year for the average household – is currently reviewed every six months and changed in October and April.
Ofgem considers a range of information when deciding where the price cap should be set. The price that energy suppliers pay for the gas and electricity they buy is a major part of this.
However, the price cap on household energy bills could be reviewed every three months under new plans mooted by Ofgem on Monday. The energy regulator said that it might insert two new reviews a year, one in January and another in July.
Around 23 million households in Great Britain have their energy prices decided by the energy price cap, so any change will have a huge impact on wallets across the country.
