Energy price cap in UK to increase by half from April

Energy price cap in UK to increase by half from April
February 3, 2022, 3:45 pm

UK-London-Parliament/Pixabay

The Xinhua reported, Britain's energy regulator announced Thursday that driven by a record rise in global gas prices, the energy price cap in Britain will increase by half from this April.

Tthe country's Office of Gas and Electricity Markets (Ofgem) said in a press release, the price cap will jump from the current 1277 pounds (1,736 U.S. dollars) to reach 1,971 pounds per year for about 22 million customers.

It said that the wholesale gas prices quadrupled last year.

Jonathan Brearley, chief executive of Ofgem, said: "We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can."

Brearley added: "The energy market has faced a huge challenge due to the unprecedented increase in global gas prices, a once in a 30-year event, and Ofgem's role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas."

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Ofgem reviews the cap twice a year, in April and October respectively. In October 2021, the regulator increased the cap for the period from October 2021 to March 2022 by 12 percent, to 1,277 pounds, compared to the previous period.

The cap "stops energy companies from making excessive profits, ensuring customers pay no more than a fair price for their energy," the press release said. "The price cap allows energy companies to pass on all reasonable costs to customers, including increases in the cost of buying gas."

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According to an official report, introduced in 2019 and originally intended to end in 2020, the cap system has been extended and may continue until 2023 if needed.

There are mixed views on the cap, the report added. Some have said the cap could interfere with competition while others said the cap comes as a potential solution to runaway energy costs.

Source: xinhua

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