‘Once in generation event’ Energy price cap set to rise again, warns Ofgem chief

Ofgem Chief Executive warns of increase in October

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Ofgem Chief Exec Jonathan Brearley told Sky News that while short-term gas prices appear to be going down, “long-term prices are still extremely high”, meaning that further price cap rises are likely. He said the only way in which prices could drop over a longer period of time would be if the war were “to change”, adding that he was apologetic he could not “stand in front of you today and give good news”. The warning will be unwelcome for millions in the United Kingdom already struggling with the cost of living crisis and “once in a generation” energy prices. 

Mr Brearley said: “Well look, we’re seeing a once in a generation event in the gas market and actually gas prices are going up. 

“You’ve got to remember that companies buy their gas ahead of time, so although some of the short term prices may be low, the long term prices are still extremely high. 

“Particularly with the war between Russia and Ukraine, we are genuinely seeing a once in a generation event in our gas market. 

“And, ultimately, that is driving up all of our bills. Now, I said to Parliament a couple of weeks ago, we do expect the price cap to go up to around a level of £2,800. 

“But those numbers are still changing. Now, I can’t stand in front of you today and give you good news that really those costs are coming down yet, simply because that validity is still there and those prices remain high.” 

Asked by Sky News’ Kay Burley whether the price cap will go up again in April, Mr Brearley said: “Well, that’s very hard to tell right now. 

“That’s quite far out and this market is changing very fast. One of the key drivers, and the reasons why we are paying so much for our energy, really is the fact that the war between Russia and Ukraine is taking away a large supply of gas across Europe and across the world. 

“So, everyone is paying much more for their gas than they used to. If that were to change then yes prices might start coming down again.” 

The energy price cap has risen significantly following the coronavirus pandemic and Russia’s invasion of Ukraine. 

As one of the largest global gas exporters, sanctions on Russia have had a crippling effect on both the European and UK economy. 

The energy price cap is likely to go up to £2,800 from around £1,970, which was itself a significant increase on prior caps. 

The cost of living crisis has been further worsened by Ukraine’s inability to export goods such as sunflower oil and grain, both of which are vital to the UK economy. 

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But Ofgem announced plans to protect against the rises, particularly for those paying their bills by direct debit. 

Limits on payments billed via direct debit could be put in place to “ensure credit balances do not become excessive”. 

Other measures include allowing energy suppliers to have sufficient control over key assets to mitigate against this difficult financial period. 

The plans come in light of more than 25 energy suppliers collapsing last year, and having to pay to move their customers to alternative suppliers. 

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