British energy market regulator moves to quarterly price cap review
British wholesale gas prices hit record highs after Russia's Feb. 24 invasion of Ukraine and have remained elevated despite falling back from their peak. Britain receives about 4% of its gas from Russia, but lower overall Russian supply to Europe means competition is intense, pushing prices higher.
- United Kingdom
British energy market regulator Ofgem said on Thursday it would review a price cap on domestic energy prices quarterly rather than twice a year to try and reduce supplier collapses and cost increases for consumers. British wholesale gas prices hit record highs after Russia's Feb. 24 invasion of Ukraine and have remained elevated despite falling back from their peak.
Britain receives about 4% of its gas from Russia, but a lower overall Russian supply to Europe means competition is intense, pushing prices higher. Ofgem said in a fast-moving energy market, six months was too long for a review.
"Today's change will go some way to provide the stability needed in the energy market, reducing the risk of further large-scale supplier failures which cause huge disruption and push up costs for consumers," Ofgem said. The cap, in place since January 2019, sets a maximum charge per unit of energy and limits suppliers' profits to 1.9%.
TOUGH WINTER LOOMS Ofgem said a six-month review delays the inevitable and means bigger changes twice a year instead of smaller ones four times a year. If wholesale prices fall then consumers would overpay for months, but if they rise suppliers sell gas at a loss for months.
Around 30 mainly small and medium-size suppliers have failed since last year. Ofgem said it will publish its next price cap level at the end of August.
On Tuesday, analysts said the average annual household dual-fuel bill - gas and electricity - will rise by around 70% in October to more than 3,359 pounds ($4,087) and remain high until at least 2024. The End Fuel Poverty Coalition campaign group warned that millions of people will face a double price hit in October and January, forcing more into so-called fuel poverty.
Last May, the government set out a 15 billion pound ($18 billion) package of support for households, saying each home would receive a 400-pound energy bill credit when the price cap rises in October, but the forecast price rise was lower. Britain is soon to have a new prime minister and there will be pressure for extra support measures.
($1 = 0.8217 pounds)
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)