The UK Office of Gas and Electricity Markets (Ofgem) has increased the price cap on electricity for consumers by 54% amid soaring gas prices, Report informs referring to the regulator’s website.
The regulator announced that from April 1, 2022, the maximum electricity bill for households will be 1,971 pounds per year ($2,670).
Thus, the electricity bill for each household could rise by 693 pounds ($940) a year. This was the largest increase since 2019, when such a mechanism was first applied.
“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,” the regulator said in a statement.
In the UK, wholesale electricity price increases more than quadrupled in 2021, from £55 ($75) per MW in December 2020 to £245 ($330) per MW in December 2021. Experts estimate that the jump in natural gas prices is responsible for 85% of this increase, given that this fuel accounts for 40% of the UK’s energy balance. This led to a massive bankruptcy in the British electricity supplier market. More than 25 UK energy companies have ceased operations or gone under external management, serving several million people.
Rising electricity prices in the UK are accompanied by record inflation over the past 30 years. In December 2021, it amounted to 5.4% in annual terms, and in April it should exceed 6%.