The energy price cap will rise by 80% from October in Britain, Britain’s energy regulator Ofgem said today, predicting that prices could worsen “significantly” next year due to the trend of natural gas prices.
Based on the current trend, Ofgem warned that “prices may deteriorate significantly throughout 2023”.
She called on the UK government to provide “urgent” aid amid a cost-of-living crisis.
The cap will go from £1,971 a year per average household to £3,549 from October.
“This increase reflects the continued rise in global wholesale gas prices, which began with the lifting of lockdowns following the COVID-19 pandemic, and were pushed to record levels when Russia phased out gas supplies to Europe,” argues Ofgem.
As this cap was calculated based on the average wholesale price of natural gas in previous months, experts expect it to rise to over £4,000 in January and up to £6,000 in the spring, according to the most pessimistic forecasts, which is expected to fuel inflation which is already over 10% on an annual basis in Britain.
“We are aware of the massive impact this increase in the price cap will have on households across Britain and the difficult decisions consumers will have to make,” commented Ofgem director general Jonathan Brearley.
Ofgem clarified that the cap provides for a “modest” profit for energy providers from selling energy to households, but that “unlike power producers, the majority of electricity distributors are now not making a profit”.
Economy and Finance Minister Nadim Zahawi also acknowledged that “the energy price cap announcements will cause stress and anxiety for many people, but help is coming with discounts of £400 on energy bills for everyone, £650 for vulnerable households and £300 for pensioners”.
“At a time when (Russian President Vladimir) Putin is driving up energy prices to avenge our support for Ukraine’s courageous struggle for freedom, I am working tirelessly to provide new reinforcements,” Zahawi also assured today, some days before Boris Johnson’s successor is announced in Downing Street.
Britain’s new prime minister should act urgently to tackle the issue of rising energy prices, Ofgem’s director general also noted, warning that prices look set to rise further.
“The Prime Minister, with his/her ministerial team, should act urgently and decisively to tackle this. All of us, together with the Government, should face this problem and manage it on behalf of customers Brearley told BBC Radio after Ofgem’s announcement.
Source: RES-MPE
Source: Capital
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
