British homes will see their energy bills swell further this winter as the UK’s energy regulator Ofgem said on Thursday that it will announce another increase in the price cap later this month.
Ofgem also said it will revise the price cap—the maximum price suppliers can charge for a unit of energy—every three months instead of every six months to adapt to the volatile global energy market.
The notice period between the announcement and implementation of the new cap, which was eight weeks last time, is also expected to be shortened.
Announcing the change on Thursday, Ofgem CEO Jonathan Brearley said the cost of supplying electricity and gas had “increased considerably” following Russia’s invasion of Ukraine.
Although the UK only imported a small portion of its gas from Russia, suppliers have still been hit by rising global energy prices.
Ofgem said more frequent adjustments will “go some way to provide the stability needed in the energy market, reducing the risk of further large-scale supplier failures which cause huge disruption and push up costs for consumers.”
The regulator also said the change means should wholesale energy prices fall in the future, the price reduction will be passed on to the customers sooner, but Business, Energy, and Industrial Strategy Committee Chairman Darren Jones said he doesn’t expect to see this happening until the end of 2024 or 2025.
Last year, an array of smaller British energy companies went bust amid higher wholesale prices driven by demand following the COVID-19 pandemic and a long and cold winter across Eurasia.
The supply shortage has been compounded by Russia’s invasion of Ukraine, after which Western countries began turning away from Russian oil and gas in a bid to cut off the country’s ability to fund the war.
In April, the price cap saw a historic hike of 54 percent, from £1,277 ($1,550) to £1,971 ($2,400) per year for customers on default tariffs paid by direct debit. It’s now predicted to soar by another 70 percent.
In May, Ofgem predicted that the price cap would reach £2,800 ($3,400) in October, but Brearley told BBC Radio 4’s “Today” programme on Thursday that the regulator now expects “significant increases again in prices, even over and above the estimate that we made in May.”
Cornwall Insight, one of the country’s most respected energy consultancies, said bills will hit a staggering £3,359 ($4,080) per year from October for the average household, and not fall below that level until at least the end of next year.
