Cost of living: Energy price cap expected to rise by £830 to £2,800 in October, says Ofgem chief

·3 min read

The UK's energy price cap is expected to rise in October to around £2,800, Ofgem's chief executive says.

The current price cap, which applies until 31 September, is £1,971 a year - and that amount was a £693 rise (54%) from the previous cap six months earlier.

Ofgem chief executive Jonathan Brearley told the Business, Energy and Industrial Strategy Committee that in October it will be "in the region of £2,800".

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The Resolution Foundation said that the increase could mean 9.6 million households in England are in "fuel stress" this winter. Fuel stress is where at least 10% of a household's total expenditure is spent on energy bills.

Earlier, Mr Brearley had said: "I'm afraid to say conditions have worsened in the global gas market, with Russia's invasion of Ukraine.

"Gas prices are higher and highly volatile.

"At times they have now reached over 10 times their normal level.

"I know this is a very distressing time for customers, but I do need to be clear with this committee, with customers, and with the government about the likely price implications for October.

"Therefore, later today, I'll be writing to the chancellor to give him our latest estimate of the price cap uplift.

"This is uncertain, we're only part-way through the price cap window, but we're expecting a price cap in October in the region of £2,800."

He added: "Our future scenarios when we look beyond that, we're really managing between two extreme versions of events: one where the price falls back down to where it was before - for example if we did see peace in Ukraine - and one where prices could go even further if we were to see, for example, a disruptive interruption of gas from Russia."

Read more:
What is the energy price cap and why are bills rising so sharply?
What is a windfall tax, how much do oil companies already pay, and has the UK tried it before?
Why some countries have lower energy bills than the UK

Mr Brearley described the current situation as "genuinely a once-in-a-generation event not seen since the oil crisis of the 1970s" - but this will be little comfort to people in the UK already dealing with rises in food, fuel, and taxes.

Shadow chancellor Rachel Reeves wrote on Twitter: "This will cause enormous worry for families already facing soaring bills.

"How many more alarm bells do the Conservatives need before they act?

"We need an emergency budget now, with a windfall tax on oil and gas producer profits to lower bills."

More intervention likely on the way

Energy Secretary Kwasi Kwarteng was speaking at the same hearing as Mr Brearley when he said later: "The chancellor is committed to more support, more help, before the price cap kicks in.

"So I'm very confident that there will be more intervention."

All the major energy suppliers saw their shares fall, as the prospect of more strain on customers makes a windfall tax more likely - Centrica (owners of British Gas) was down 9%, Scottish Power owner Iberdrola was down 1.6%, E.ON lost 2.3%, SSE fell 6.7%, and EDF lost 2.5%.

Earlier this month, the energy regulator said the price cap - the mechanism that sets a limit on the amount suppliers can charge for gas and electricity and on the daily standing charge - could soon be reviewed every three months, instead of every six months.

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