U.K. Energy Price Cap to Increase by GBP139 This Winter as Gas, Power Prices Soar

The energy watchdog said the increase will affect 15 million U.K. customers between October 2021 and March 2022. Around 11 million households on default tariffs paying by direct debit will see a GBP139 increase, to GBP1,277, compared with the summer 2021 price. Four million prepayment customers will see a GBP153 raise, to GBP1,309, it said.

The wholesale energy cost component, which makes up for around 40% of the bill, will increase by 42%, or GBP155. it said. This has been partially offset by slightly lower costs elsewhere.

Ofgem blamed a 50% rise in energy costs over the past six months for the increase, with gas prices reaching record highs.

“Higher energy bills are never welcome and the timing and size of this increase will be particularly difficult for many families still struggling with the impact of the pandemic,” Ofgem Chief Executive Jonathan Brearley said.

Mr. Brearley said the price cap means that suppliers only pass on legitimate costs, and he encouraged struggling customers to access available help and to shop around for a better deal if possible.

Shares at 0737 GMT in Centrica PLC, the owner of British Gas, were down 0.5% at 47.77 pence. Shares in Telecom Plus PLC, another British energy supplier, were up 0.4% at 1,034 pence.

Energy UK, an organization representing U.K. energy companies, said prices are increasing because of global factors that are out of retailers’ control.

“Ofgem sets the price cap at a fair level for customers, but it also needs to reflect when suppliers face increased costs to allow them to keep operating in a market where most providers are making little or no profit at present,” Energy UK Chief Executive Emma Pinchbeck said.

The GMB union said on Twitter that the price-cap increase is “outrageous,” and that it will pile pressure on the poorest households while increasing U.K. dependence on energy imports.