UK household energy bills will rise by 10% from October 1 due to extreme weather conditions and geopolitical instability.
UK energy regulator Ofgem has raised the price cap on household energy bills by 10% from the current level, in place since July, to £1,717 ($2,250) a year. This is the first time Ofgem has raised the price cap since January 2023, when it hit a record high of £4,279. The government has since worked to protect consumers from the burden of the price rise, capping annual bills at £2,500 for a typical household.
The new cap, which runs from October 1 to December 31, is £117 cheaper than the same period last year.
The regulator cited extreme weather conditions and geopolitical events, such as the war in Ukraine, as reasons for the rise in wholesale gas prices.
Jonathan Brearley, CEO of Ofgem, said: “Ultimately, the price increase we are announcing today is driven by our reliance on a volatile global gas market that is too easily influenced by unforeseen international events and the actions of aggressive states.”
“We know that this price increase will be extremely difficult for many households.”
Households may struggle to cope with the recent increase, pushing them further into debt. According to the latest figures from Ofgem, bad debt has risen to a record £3.1 billion and is unlikely to be recovered.
The price increase is more than analysts had expected. On August 19, energy consultancy Cornwall Insight reported told Reuters that it expected the ceiling to rise by only 9% due to a rise in wholesale gas and electricity prices, which “have stabilised somewhat compared to the previous two years” but “have not yet fully recovered from the energy crisis and the impact of the Russian invasion of Ukraine”.
At the beginning of this year, bank ING said that European gas prices rose because storage capacity was lower than seasonal averages.
British Energy Secretary Ed Miliband said: “The price cap hike is a direct result of the failed energy policies we inherited, which have left our country at the mercy of international gas markets controlled by dictators. The only solution to lower bills and achieve greater energy independence is the government’s clean, domestic energy mission.”
“UK household energy bills to rise 10% from October” was originally created and published by Energy technologya brand of GlobalData.
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