Millions of Britons are set to face increased energy costs starting in April as the regulator Ofgem announced a 6.4% rise in the domestic price cap, attributing it to surging wholesale energy prices. This marks the third consecutive quarterly increase, dealing a blow to the government's efforts to lower energy bills. Ofgem's new cap of £1,849 ($2,334.18) per year for average electricity and gas usage represents a £111 or 6.4% increase from the previous cap of £1,738.
The unexpected hike exceeds analysts' earlier predictions of around a 5% rise. The spike in wholesale gas prices, hitting a two-year high in February due to increased demand amidst cold temperatures and the expiration of a gas supply deal via Ukraine, has been a significant factor driving up energy costs.
Energy Minister Ed Miliband highlighted the government's commitment to reducing reliance on costly fossil fuels and expanding the Warm Home Discount program. The minister emphasized the importance of transitioning to clean energy sources under national control to enhance energy security and lower bills permanently.
Efforts to support vulnerable households include calls for social tariffs and debt relief schemes. Ofgem and the government are collaborating on developing potential debt relief initiatives to address the growing burden on consumers, amounting to nearly £4 billion last year.
Looking ahead, the price cap might decrease to £1,756 per year in July based on current wholesale prices, as forecasted by analysts at Cornwall Insights. Nevertheless, market volatility suggests that this forecast may undergo revisions before the next cap level is finalized.
(1 USD = 0.7921 GBP)