Energy price cap set to hit £2,800 in October - Ofgem chief
Energy bills are on course to rise by more than £800 in October, the head of Ofgem has warned politicians.
Appearing before the Business, Energy and Industrial Strategy committee, in a session on the future of the energy market, Jonathan Brearley said that while the next price cap review was ongoing, early indications were for a significant increase.
"We are expecting a price cap in October in the region of £2,800," he said. The price cap - the maximum price suppliers can charge customers - is currently £1,971 after Ofgem increased it by 54% in April, to better reflect surging wholesale costs.
Brearley warned that 12m households could up in fuel poverty as a result, and called on government to take action. "We need government to step in," he said.
Wholesale oil and gas prices have soared over the last year, with volatility further ramped up following Russia’s invasion of Ukraine on 24 February.
Brearley said the price rises were a "once in a generation event not seen the since the oil crisis in the 1970s". He explained that conditions in the global gas market had worsened since the invasion, and prices could rise yet further if Moscow disrupted supplies. Russia is one of the world’s largest exporters of natural gas.
He told MPs: "We are really managing between two versions of events. One where the price falls back down to where it was before, for example if there’s peace in Ukraine, but one where prices could go even further if we were to see, for example, a disruptive interruption of gas from Russia."
His appearance before the committee coincides with reports that the Treasury looked to be pulling back on its initial resistance to a windfall tax on energy companies’ excess profits.
The price cap is currently reviewed every six months. Earlier this month Ofgem launched a consultation on switching to quarterly reviews.