The energy regulator said that being able to update the energy price cap more often would provide stability to the energy market and reduce the risk of collapse of energy companies. Dozens of suppliers have collapsed in the past year alone, adding to customers’ bills and resulting in criticism of Ofgem for not being tough enough on rogue companies. The next price cap level will be published at the end of August, and while more frequent cap updates will mean customers will benefit more quickly if prices fall, this is unlikely to happen in the near future. This week, energy consultancy Cornwall Insight predicted that the cap would reach £3,359 a year from October for the average household and would not fall below that level until at least the end of next year. The price cap on energy bills, which sets what 24 million British households pay, will reach £3,616 from January and rise further to £3,729 from April, it said. It will begin to slowly fall after that, reaching £3,569 from July before reaching £3,470 for the final three months of 2023. In October last year, the cap was £1,277. Read more: What is the energy price cap and why are bills rising so sharply? How will the £400 energy payment work? Ofgem chief executive Jonathan Brearley blamed Russia’s invasion of Ukraine for a spike in wholesale energy prices. He said: “I know this situation is deeply worrying for many people. As a result of Russia’s actions, the volatility in energy markets we experienced last winter has lasted much longer, with prices much higher than ever before. “And that means the cost of providing electricity and natural gas to homes has gone up significantly.” The UK imports only around 4% of its gas from Russia, but lower Russian supply to Europe means competition is fierce, pushing prices higher. “Extremely difficult” exchanges Mr Brearley added: “The trade-offs we have to make on behalf of consumers are extremely difficult and there are simply no easy answers at the moment. “Today’s changes ensure that the price cap does its job, ensuring that customers only pay the true cost of their energy, but also that it can adapt to the current volatile market. “We will continue to work closely with the government, consumer groups and with the energy companies on what further support can be provided to help with these higher prices.” “Increased unhappiness and massive stress” National Energy Action director of policy and advocacy Peter Smith said: “January is also typically a time of increased mental health problems and further increases in bills will unfortunately lead to increased misery and huge stress for energy consumers across Great Britain. especially for the poorest households. . “It is disappointing that Ofgem did not listen to these concerns. They could have used their discretion to offset this avoidable outcome by starting the reforms in April when energy demand starts to fall. “This change also reinforces growing calls for deeper price protection for the poorest households, which Ofgem can and should support.” Government financial support ‘may not be enough to keep many alive’ Gillian Cooper, head of energy policy at Citizens Advice, said: “One thing added to all our bills is the cost of supplier failures. The change to a three-month price cap will limit the risk of other suppliers collapsing, which is a good thing. But our bills are already incredibly high and still growing. “The government was right to bring in financial support for people, but it may not be enough to keep many families alive. It needs to be ready to act again before winter sets in. “Ofgem needs to make sure suppliers help customers who are struggling to pay. It should hold energy companies to account so people aren’t hounded by debt collectors or forced into prepayment meters when they can’t keep up with bills .”
