UK regulated energy price cap to rise 54% in April: Ofgem

The UK's regulated tariff cap energy tariff is to rise by an average GBP693/year ($940/year) to GBP1,971/year from April 1, energy regulator Ofgem said Feb. 3.

Rising wholesale gas and power prices had forced the 54% increase for the six-month period of standard variable tariff charges to end-September, it said.

"The increase is driven by a record rise in global gas prices over the last six months, with wholesale prices quadrupling in the last year," it said.

Those on pre-payment meters will see an average increase of GBP708/year to GBP2,017.

In a breakdown of the hike, Ofgem data showed the wholesale energy component of bills would rise 104% to GBP1,077, while the networks component would rise 39% to GBP371.

The cap applies to around 22 million households. Of these, 4.5 million are on pre-payment meters, where the average dual fuel bill is GBP1,309/year.

Chancellor Rishi Sunak was due this afternoon to set out how the government would help households with the tariff hike.

Ofgem said it would bring forward reforms to the price cap in October.

In H2 2021, UK NBP day-ahead gas prices averaged 157 pence per therm (Eur63.14/MWh), up from 28 p/th (Eur10.63/MWh) for H2 2020 and 29 p/th (Eur11.39/MWh) for H1 2019, S&P Global Platts data show.

Ofgem revises regulated standard variable tariffs for power and gas every six months.

At present, the average dual fuel bill is GBP1,277/year after a 12% hike was applied in August last year for the six-month period to end-March 2022.

The growing gap between the price cap and rising wholesale prices has seen 29 suppliers go bust since the start of 2021.

Including Bulb UK, which went into special administration at the expense of the state on Nov. 22 last year, 4.5 million customers have now been directly affected by the crisis.

Of these, 2.8 million have had to be moved to Suppliers of Last Resort under the price cap. The cost of this action alone was put at GBP100 per bill per year by Centrica, according to CEO Chris O'Shea.

VAT and green levy costs, add another GBP275/year to bills, O'Shea said Jan. 12.

Gas-fired power stations supplied around 37% of the UK's power mix in 2021. UK wholesale power prices last year averaged GBP127.21/MWh, up 243% year on year.