Why energy prices are rising again
Soaring demand leads to wholesale gas price increases being passed on to consumers
Energy prices are expected to soar this autumn after the regulator said it would increase its cap on the most widely used tariffs, blaming a rise in wholesale energy prices.
Ofgem said the cap for average annual consumption on the standard tariffs, used by about 11 million British households, will rise by £139 to £1,277. For the four million homes with pre-payment energy meters, it will rise by £153 to £1,309.
The increase “comes at the worst possible time”, campaigners told Sky News, as it will coincide with the end of the furlough scheme and the temporary £20-a-week boost to benefits. They say it will push an extra 488,000 households into fuel poverty, joining the four million people already estimated to be behind on their household bills.
The energy price cap originally came into force in January 2019, when it saved people on standard tariffs an average of £76 a year.
But in recent months “gas prices have climbed due to growing demand as pandemic restrictions ease”, says The Telegraph. High carbon prices, low gas storage stocks and maintenance work affecting some North Sea projects are exacerbating costs.
Jonathan Brearley, Ofgem’s chief executive, admitted that “the timing and size of this increase will be particularly difficult for many families still struggling with the impact of the pandemic”.
He said that said families struggling to pay bills should contact their suppliers to access any help that’s available.
Earlier this week, the campaign group We Own It described a £1m bonus for Ofgem staff as a “disgrace”. The Daily Mirror says Brearley, who earned more than £300,000 in pay and perks, picked up £15,000.
We Own It director Cat Hobbs said: “At a time when millions are facing fuel poverty after yet another price cap hike, it is in poor taste that Ofgem can find tens of thousands of pounds for bosses, on top of already large salaries.”