UK households are expected to see even higher energy bills this winter as the UK’s energy regulator, Ofgem, announced on Thursday that it will announce further price cap increases later this month.
Ofgem also said it will change its price cap (the maximum price a supplier can charge for a unit of energy) every three months instead of every six months to adapt to volatile global energy markets.
The notice period between announcement and implementation of new caps will also be shortened from the previous eight weeks.
Announcing the change on Thursday, Ofgem CEO Jonathan Brearley said the cost of supplying electricity and gas had “increased significantly” after Russia’s invasion of Ukraine.
Britain imports only a small portion of its gas from Russia, but suppliers are still being hit by rising global energy prices.
Ofgem said more frequent adjustments “will somehow work to provide much-needed stability to energy markets, causing massive disruptions and further failure of large suppliers to drive up costs for consumers.” It reduces risk,” he said.
The regulator also said the change would mean that if wholesale energy prices fell in the future, price cuts would be passed on to customers sooner, while Darren Commissioner Jones said he did not expect this to happen. By the end of 2024 or 2025.
Last year, a series of small UK energy companies went bankrupt as wholesale prices rose due to demand from the COVID-19 pandemic and a long cold Eurasian winter.
The supply shortage was exacerbated by Russia’s invasion of Ukraine, after which the West began to turn its back on Russian oil and gas in order to cut off the country’s ability to finance the war.
In April, the price cap was raised a historic 54% from £1,277 ($1,550) to £1,971 ($2,400) annually for default fee customers paid by direct debit. A further 70% increase is projected.
In May, Ofgem predicted the price cap would hit £2,800 ($3,400) in October, but Brearley told BBC Radio 4’s Today program on Thursday that regulators said prices could rise significantly again. I am looking forward to it,” he said. I made it in May. “
According to Cornwall Insight, one of the country’s most respected energy consultancies, bills have reached a staggering £3,359 ($4,080) a year for the average household since October, with at least It won’t drop below that level until the end of next year.
PA Media contributed to this report.