How much could energy bills rise to in October? Next price cap will push prices higher
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The energy price cap could change more frequently under new plans from the energy regulator Ofgem. Millions of UK households are struggling with huge energy costs that are expected to rise yet again in October.
Bills have already soared once this year, with the price cap being pushed up to £1,971 in April; up £693 from the last adjustment.
It is set twice a year in April and October, with another huge shock expected to come later in 2022.
International wholesale gas prices jumped last year as demand outstripped supply.
But as they were expected to turn back down, they have remained elevated due to Russia’s invasion of Ukraine.
How does the price cap work?
The energy price cap sets the highest amount a supplier can charge for its default tariffs.
Currently, it is used to determine gas and electricity bills for some 22 million households across the UK.
Under new plans announced by Ofgem, the regulator would amend the price cap four times a year instead of two.
Ofgem said its proposals would enable greater agility: allowing bills to rise or decline more quickly.
However, Ofgem’s chief executive said this morning that bills would rise again in October.
In a statement, the regulator said: “A more frequent price cap would reflect the most up-to-date and accurate energy prices and mean when prices fall from the current record highs, customers would see the benefit much sooner.
“This change would also help energy suppliers more accurately predict how much energy they need to purchase for their customers, reducing the risk of further supplier failures which ultimately push up costs for consumers.”
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How much will bills rise in October?
The latest forecasts suggested bills could rise to almost £2,600 in October when the next price cap adjustment is due.
Ofgem chief executive Jonathan Brearley said the change would also mean that bills may rise quickly, but can also fall in line with wholesale prices.
He said: “Remember that the total cost you pay over the year would be absolutely the same, because that reflects only the cost of the energy that we buy.
“Yes, the price would go up more quickly as prices go up, but equally importantly as those prices come down, then the price cap comes back down again.
“I remember back in the 2010s when people saw their prices go up and were waiting and wondering why prices didn’t come down equally quickly.
“The good thing about the price cap is that we will make sure it only reflects costs, and therefore it only reflects what you need to pay for your energy.”
He added: “With the Russian invasion of Ukraine, we are seeing a sustained increase, a further increase, in gas prices.
“So, the difficult news I have is that it is likely in October that prices will go up again.”
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