Britain's energy price cap will rise by 10% in October, pushing up bills for millions of households at the start of the winter heating season. The level will rise to £1,717 ($2,251) from October 1, driven by higher electricity and gas prices in wholesale markets, data released on Friday showed. Regulator Ofgem is reported to revise the price cap every three months.
Chancellor Rachel Reeves is likely to face criticism that the increase in bills coincides with new rules limiting the number of pensioners eligible for winter heating subsidies. The cap, which usually represents an average household's annual bill, is expected to rise again in January by about 3%, according to Cornwall Insight.
It's the second consecutive increase and will make it harder for the new government to deliver on its campaign promise to lower bills. Soaring energy bills have been a driver of Britain's inflation and cost-of-living crisis and a key issue for voters in July's general election.
"The increase in the price cap is a direct result of the failed energy policy we have inherited, which has left our country at the mercy of international gas markets," Miliband, the energy security and net zero secretary, said in a statement.
Prime Minister Keir Starmer has proposed that the new state-owned energy company Great British Energy offer a solution by investing in renewable energy supply to lower electricity prices. However, building new infrastructure is not an immediate measure and the benefits may take years to be felt.
The Bank of England expects inflation to accelerate this year. After cutting to its 2% target over the summer, it now forecasts it will reach 2.7% by the end of 2024 before easing again.
Energy poverty charities have been sounding the alarm since Reeves announced some pensioners would miss out on a subsidy known as winter fuel charges, which only means-tested people can claim.
A report by the influential charity Citizens Advice found that a 10% increase in the price cap would mean around 25% of UK residents would consider turning off their heating and hot water this winter. Regulator Ofgem said that while bills have fallen from their peak during the energy crisis, customer debt levels remain at record levels.
The recent rise is largely due to higher prices for futures contracts due to supply risks arising from the Russia-Ukraine conflict and tensions in the Middle East. British gas contracts have risen by more than 8% since the previous price cap came into effect on July 1.
Craig Lowrey, chief consultant at Cornwall Insight, said: "It is unrealistic to hope that the market will self-correct and return to pre-crisis price levels, especially given that bills are still well below historical standards three years on."
Source：solarzoom