FINANCE

Cost Of Living Crisis: Energy Price Cap Rise In The UK

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In the UK, the current energy price cap, applying until the 31st of September 2022, is £1,971 yearly, which is a £693 rise, in other words a 54% rise, from the previous price cap. It is expected to further rise in October 2022 to around £2,800, according to Ofgem’s chief executive, who also said, “I’m afraid to say conditions have worsened in the global gas market.” Read on for further details on the cost of living crisis currently.

Ofgem chief executive, Jonathan Brearley, told the Business, Energy and Industrial Strategy Committee that in October it will be “in the region of £2,800”. The Resolution Foundation said that this increase could mean 9.6 million household in England are in “fuel stress” for this winter. Fuel stress is where at least 10% of a household’s total expenditure is spent on energy bills.

Jonathan Brearley said, “I’m afraid to say conditions have worsened in the global gas market, with Russia’s invasion of Ukraine. Gas prices are higher and highly volatile. At times they have now reached over 10 times their normal level. I know this is a very distressing time for customers, but I do need to be clear with this committee, with customers, and with the government about the likely price implications for October. Therefore, later today, I’ll be writing to the chancellor to give him our latest estimate of the price cap uplift. This is uncertain, we’re only part-way through the price cap window, but we’re expecting a price cap in October in the region of £2,800.”

He added, “Our future scenarios when we look beyond that, we’re really managing between two extreme versions of events: one where the price falls back down to where it was before – for example if we did see peace in Ukraine – and one where prices could go even further if we were to see, for example, a disruptive interruption of gas from Russia.”

The Ofgem chief executive described the situation as “genuinely a once-in-a-generation event not seen since the oil crisis of the 1970s”, however, as Sky News says, this is little comfort to those in the UK already dealing with rises in food, fuel, and taxes.

Shadow chancellor Rachel Reeves said on Twitter, “This will cause enormous worry for families already facing soaring bills. How many more alarm bells do the Conservatives need before they act? We need an emergency budget now, with a windfall tax on oil and gas producer profits to lower bills.”

This leaves people to budget and use savings as best they can, and leaves ministers under even greater pressure to offer more support, especially during the colder, darker, more expensive months.