Ofgem has confirmed that the energy price cap will be updated quarterly, rather than every six months, as it warned that customers face a “very challenging winter ahead”. Bills last went up in April and are set to go up again in October.
The announcement means your gas and electricity bills could now go up every three months. The average household’s energy bill might hit around £500 a month in January alone, experts have said as they released another gloomy forecast for consumers across the country.
BFY Group, a utilities consultancy, said it expects the cap on bills to hit £3,850 between January and April next year – hundreds of pounds more than prior predictions.
The latest forecast comes after the Kremlin further strangled the flow of gas to Europe.
While the UK gets very little of its gas directly from Russia, the price paid here is determined by what happens across the Continent.
Ofgem said the change to when the energy price cap is updated “will go some way to provide the stability needed in the energy market, reducing the risk of further large-scale supplier failures which cause huge disruption and push up costs for consumers,” adding: “It is not in anyone’s interests for more suppliers to fail and exit the market.”
It said that although Britain only imported a small amount of Russian gas, as a result of Russia’s actions, the volatility in the global energy market experienced last winter had lasted much longer, with much higher prices for both gas and electricity than ever before.
As expected, Ofgem also warned that as a result of the market conditions, the price cap would have to rise to reflect increased costs.
The next price cap level will be published at the end of August.
Ofgem chief executive Jonathan Brearley said: “I know this situation is deeply worrying for many people. As a result of Russia’s actions, the volatility in the energy markets we experienced last winter has lasted much longer, with much higher prices than ever before. And that means the cost of supplying electricity and gas to homes has increased considerably.
“The trade-offs we need to make on behalf of consumers are extremely difficult and there are simply no easy answers right now. Today’s changes ensure the price cap does its job, making sure customers are only paying the real cost of their energy, but also, that it can adapt to the current volatile market.
“We will keep working closely with the Government, consumer groups and with energy companies on what further support can be provided to help with these higher prices.”
