Energy price cap expected to rise to £2,800 in October, says Ofgem chief exec

The energy price cap is expected to rise from £1,971 to £2,800 a year in October, the boss of Ofgem has told MPs.

Speaking to the Business, Energy and Industrial Strategy Committee, Ofgem chief executive Jonathan Brearley said he is writing to Chancellor Rishi Sunak today informing him he expects the cap to rise to around £2,800.

Mr Brearerly said: “I’m afraid to say conditions have worsened in the global gas market.

“With Russia’s invasion of Ukraine, gas prices are higher and highly volatile.

“At times they have now reached over 10 times their normal level.

“I know this is a very distressing time for customers but I do need to be clear with this (BEIS) committee, with customers and with the government about the likely price implications for October.

“Therefore later today, I will be writing to the Chancellor to give him our latest estimates of the price cap uplift.”

Mr Brearerly said Ofgem was still uncertain on exact figures as “we are only partway through the price cap window, but we are expecting a price cap in October in the region of £2800.”

The Ofgem Chief Exec has told MPs the price cap will rise c42% in Oct putting typical use to £2,800/yr. I’m glad he’s been open about this, I asked last week for them to publish forward guidance.

This is higher than analysts predictions of £2,600 (both bloody awful though)

— Martin Lewis (@MartinSLewis) May 24, 2022

Mr Brearley said that reflecting on the gas crisis so far, “we commissioned and published an independent review to understand the drivers and causes of supplier failure.

“This report has highlighted something I’ve made clear to this committee before.

“There are significant lessons to be learned from this crisis and change is absolutely needed to the way we regulate the retail market.

“The price changes we’ve seen in the gas market are genuinely a once in a generation event not seen since the oil crisis in the 1970s.

“In any conceivable circumstances, there would have been supplier failure.

“However, it is clear to me and it is clear to the current Ofgem board, looking over all of our institution’s history that had financial growth controls been in place sooner, we’d have likely seen fewer suppliers exit the market and for that, on behalf of Ofgem and its board I would like to apologise.”

Mr Breary said: “I speak directly to customers on a very regular basis, I know that this news and the news of the price have been April is highly distressing.

“Ofgem, NGOs and the government will need to work closely together to make sure we manage the implications for the price changes that are to come and I understand from our workings with government that ministers are prepared to do.”