U.K. Household Energy Price Cap Set to Surpass £2,255 in October
U.K. Household Energy Price Cap Set to Surpass £2,255 in October
(Bloomberg) -- The U.K.’s price cap on energy bills could soar in October for the second time this year, compounding mounting costs for households.
The annual limit for an average household on a standard variable tariff could jump as high as 2,255 pounds ($3,077) from Oct. 1, according to Cornwall Insight Ltd. That’s 77% higher than the current price cap and a 17% increase on the level the energy consultancy predicts will be in place from April.
Cornwall also added its voice to calls for wider market reform and an end to the price cap, which currently protects around 15 million households from extreme hikes in their bills.
“The cap will not protect consumers from increases in gas and power prices in the long run,” said Gareth Miller, chief executive officer at Cornwall Insight, who called on the government to alleviate pressure on consumers through the tax and welfare system instead. “It is not helpful for government to keep pointing to the Default Tariff Cap when pressed on what action it is taking.”
Europe is facing an energy crisis -- due largely to a supply crunch for natural gas -- that’s driven 24 household suppliers bust since the start of August as wholesale power prices soar. While the price cap, currently set at 1,277 pounds by regulator Ofgem, has limited the costs companies can pass on to consumers, it has also made it more difficult for suppliers to make profits.
Cornwall currently expects the price cap to increase 51% to 1,925 pounds per year from April 1, the first of its twice-yearly adjustments. The number of households in the U.K. struggling to pay their energy bills is set to triple when that happens, according to the Resolution Foundation think tank. Ofgem is due to announce the April rise in early February.
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