The energy price cap will rise by 80% from October in the UK, British energy regulator Ofgem announced on Friday, warning of potentially higher prices next year.
Given current trends, Ofgem warned, prices could worsen significantly throughout 2023. It called on the British government to provide “urgent” aid in the midst of a cost-of-living crisis.
The energy price ceiling will go from £1,971 per year per average household to £3,549 pounds from October, Ofgem said. The increase reflects the continued rise in global wholesale gas prices, which started with the post-Covid lockdowns, and was pushed to record highs as Russia slowly cut gas supplies to Europe, Ofgem explained.
Since this threshold is calculated according to the average wholesale gas prices over previous months, experts expect it to jump to more than £4,000 in January and up to £6,000 in Spring 2023, according to the most pessimistic projections.
This would fuel inflation, which is already more than 10% per year in the United Kingdom.
Ofgem CEO Jonathan Brearley said the regulator recognised the “massive impact” the price cap hike will have on households across Britain and the difficult decisions consumers will have to make.
Ofgem said the cap provided for a “modest” profit for energy suppliers on energy sales to households but noted that, unlike energy producers, most distributors were currently not making a profit.
Economy and Finance Minister Nadhim Zahawi acknowledged that the price cap announcements would cause stress and anxiety for many people but said help was on the way, with £400 off utility bills. energy for all, £650 for vulnerable households and £300 for pensioners.
“While (Russian President Vladimir) Putin is driving up energy prices in revenge for our support for Ukraine’s courageous struggle for freedom, I am working tirelessly to develop new aid,” he said.
The announcements come just a few days before the name of Boris Johnson’s successor in Downing Street is scheduled to be announced.
