Families struggling to pay household bills are facing even “tougher” price rises, the head of Britain’s energy regulator Ofgem warned on Monday, as he announced plans to review the energy price cap quarterly.
Jonathan Brearley said the cap, which outlines the maximum amount companies can charge for energy, could be reviewed every three months instead of twice a year as bills continue to soar.
The cap has been credited with protecting households from the worst of the hikes after Covid and the war in Ukraine pushed up wholesale gas.
Average bills rose by almost £700 a year last month and are forecast to rise to more than £2,600 a year in October when the cap is next reviewed.
“Things are going to get tougher as far as we can see,” Mr Brearley told Sky News. “It is not certain, the market is changing dramatically almost day by day, but we have to warn customers to expect further price rises in October.”
Ofgem argued that reviewing the cap only twice a year contributed to the collapse of several energy companies last year.
Mr Brearley said adjusting it more regularly would reflect the most accurate energy prices and mean when costs fall from the current record highs, customers would see the benefit sooner.
He added: “The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.”
But MoneySavingExpert founder Martin Lewis said the changes would likely only benefit energy companies.
He apologised for telling Ofgem staff that the changes were a “f***ing disgrace that sells consumers down the river” during a meeting on Monday morning.
Treasury Committee chairman Mel Stride said the UK was in “extraordinary circumstances” as he backed calls for a windfall tax on energy companies.
A government spokesman said the price cap had been extended beyond 2023 to “ensure families continue to pay lower bills than they otherwise would”.