Ofgem confirms energy price cap will rise to £3,549 from October

The UK’s energy regulator has set the new price cap at £3,549 from October, marking a sharp 80 per cent rise in the cost of energy to be consumed by Britons.

Ofgem added that it was not sharing projections for January when a new cap will take effect as the market continued to be too volatile.

However, the market for gas in winter would lead to “significantly worse” prices through next year.

Millions across Britian are facing the heat of soaring energy bills, compounded by Friday’s announcement, after wholesale gas prices have continued to rise after the pandemic.

The power crisis has turned grimmer in Europe in the wake of Russia’s invasion of Ukraine and Moscow’s move to curtail gas exports to Europe.

The energy price cap is the maximum amount that gas suppliers can charge customers per unit of energy.

Ofgem decides the price cap by observing what wholesale energy prices do over several months.

It then multiplies this price per unit by the number of units of gas and electricity that an average household uses in a year.

To this it adds several charges. These include VAT, green and social levies, charges paid to the energy networks, and a small amount of profit.

The cap is designed to limit the amount of profit that an energy supplier can take but it does not limit the profits of the companies that sell the same energy to that supplier.