Ofgem, the U.K.’s energy regulator, announced it will raise the energy price cap for the average consumer to £3,549 per year, up 80% from £1,971 in October.
While academics and politicians called on the British government to address the high cost of living crisis.
The energy price cap is the limit to which energy service companies can charge customers in England, Scotland, and Wales for electricity and gas, but Ofgem reset the energy price cap this year to take into account wholesale market prices and other industry costs.
Gas prices hit a record high last year following increased global demand, particularly in Europe. Gas reserves have fallen to a low level and the suspension of Russian gas imports to punish Russia is one of the main factors driving up electricity prices
Earlier this month, Ofgem announced it would review the energy price cap every three months, instead of every six months, to reflect current market volatility.
Consulting firm Cornwall Insight estimates that the energy price cap could rise to £4,649.72 in the first quarter of 2023 and £5,341.08 in the second quarter of 2023, before falling slightly to £4,767.97 in the third quarter of that year.
The average annual energy price in October 2021 was £1,400, while it is currently £1,971.