Regulator says UK energy price cap rises by 80%

Energy prices paid by most British households are set to rise 80 per cent this fall, adding pressure on consumers and fueling inflation.

On Friday, Ofgem, the government’s energy regulator, said the so-called ceiling of what the average household would pay for electricity and natural gas over the course of a year would rise to £3,549 (about $4,200) from £1,971 currently. Consumers and businesses in Britain and elsewhere across Europe are taking a hit from massive energy price increases as the war in Ukraine extends into already tight markets for electricity and natural gas.

“This would be devastating for many families,” Jonathan Brierley, chief executive of the regulator, told the BBC. “The tough news I have to give today is that prices look like they’re continuing to rise,” he said, looking ahead to early next year.

“The pressure on extended families will only intensify, and calls for support will grow more than ever,” Martin Young, facilities analyst at Investec, a financial services firm, wrote in a recent note to clients. Young expects another jump to £4,210 in January.

UK consumer prices It rose 10.1 percent last month from a year earlier, the fastest pace in 40 years, Pressure on family budgets. The Bank of England forecast that inflation It will peak at 13 percent in October With new energy prices rising home bills. Other estimates are higher; Analysts at Citi said the rate could reach 18 percent next year.

Rising prices and how to deal with them has become a hot topic of political discourse in Britain and across Europe. While the British government has offered a £400-per-family package to help residents with rising bills, a wide range of politicians, consumer advocates and energy executives are now saying more aggressive intervention is needed to protect families from rising energy costs.

Recently, Britain’s opposition Labor Party said it would freeze energy tariffs where they are now, paying for part of the £29 billion cost by increasing the so-called windfall profit taxes imposed by the Conservative government earlier this year on oil and gas giants operating in the states. United. North Sea.

The main component in Ofgem’s calculations was the doubling of wholesale electricity and natural gas costs. These represent about 70 percent of the new maximum price.

Mr Brearley said dealing with increases of this magnitude was outside the scope of Ofgem, whose role is to protect consumers from profiteering by suppliers. “The reality is that this is beyond the capacity of the industry and the regulator to address,” he added.

Britain’s ruling Conservative Party selects a new prime minister to replace Boris Johnson in early September, choosing between Liz Truss and Rishi Sunak. Mr. Brierley called on the winning candidate to intervene decisively in the energy markets.

“What I am clear about is that the prime minister and his ministerial team will need to act urgently and decisively to address this,” he said. “The outlook for the winter without any action already seems very difficult.”