OFGEM to raise energy price cap in October

OFGEM has announced that the energy price cap, the mechanism by which the energy sector regulator controls domestic energy costs, will increase by 80 percent from 1st October 2022 due to rising wholesale gas and electricity prices. The increase, which follows a 54% increase in the price cap in April 2022, is expected to see average household bills reach £3,500 based on typical usage.

Unfortunately for domestic energy users, that isn’t the end of the bad news with Cornwall Insight, a leading independent energy research firm, forecasting that the price cap will rise by a further 52 percent in January 2023 and then a further 23 percent in the following quarter.

Reacting to the price cap rise, David Rodger, CEO of national debt charity Debt Advice Foundation said “Following two very challenging years for people in financial terms as a result of the pandemic, these large increases in essential expenditure are simply unsustainable for many UK households. Current estimates are that as much as 40% of UK households will enter fuel poverty this winter, raising very real concerns over an impending public health crisis, with many households forced to choose between heating their home or putting food on their table.”

“We’re also worried about small businesses, which do not benefit from an energy price cap, and the effect of uncontrolled price increases in the commercial energy market on bottom lines. Whether we’re talking about domestic or commercial energy usage, it is vital that the new Prime Minister makes tackling energy bills a priority for this government.”