Ofgem could raise the energy price cap more often

josh jackman
Written By
Published on 24 November 2021

The current price cap on energy bills is £1,277 per year

Ofgem is expected to raise the cap to £1,660 in April 2022

An increased number of price cap hikes would affect 15 million homes

Ofgem is considering changing its rules so it can raise the price cap more than twice per year.

This could mean an increasing number of energy bill hikes for the 15 million homes who use the default tariff – more than half of all households in the UK.

Under new plans, the energy regulator would be allowed to change the price cap more than twice per year when there are “exceptional or unprecedented market changes such as the high global gas prices we have been experiencing recently.”

Ofgem has launched a consultation which will end on 17 December 2021, with a final decision set to be made in February 2022.

couple with energy bills

This is happening because Ofgem has bowed to pressure from the energy industry.

The UK has been enduring an energy crisis in the latter part of 2021, with more than 20 suppliers going bust over three months, and 4.2 million customers forced to move companies.

During this turbulent time, energy suppliers have lobbied Ofgem to raise or even destroy the price cap, after companies were forced to temporarily charge consumers a lower price than they originally paid for the energy.

Ignacio Galan, CEO of Iberdrola, which owns Scottish Power, told BBC News: “The price cap decision was made in a very particular situation, to protect the consumer. But when the situation changes, it doesn’t work.”

He added: “The price cap was made on a temporary basis, and I don’t know why it has been maintained.”

Uswitch energy policy expert Justina Miltienyte blamed the cap for Bulb’s recent demise, saying the UK’s seventh-largest supplier was “choked off by the way the government decided to structure the current energy market with the price cap.”

The price cap was raised by £139 per year in October 2021, and is predicted to shoot up by £383 in April 2022 to a cap of £1,660, according to market analysts Cornwall Insight.

This already represents a significant strain on consumers, from those forced to pay the maximum amount to those searching for new contracts and finding only expensive options.

An increased number of price cap increases could make it hard for the 15 million households on the dual tariff to budget ahead, since at any time their energy bills can shoot up.

It also raises the spectre of energy bills repeatedly soaring to new heights throughout 2022, at a time when many consumers are already struggling.

Written by

josh jackman

Josh has written about and reported on eco-friendly home improvements and climate change for the past four years.

His data-driven work has featured on the front page of the Financial Times and in publications including The Independent, Telegraph, Times, Sun, Daily Express, and Fox News, earned him the position of resident expert in BT's smart home tech initiative, and been referenced in official United Nations and World Health Organisation documents.

He’s also been interviewed on BBC One's Rip-Off Britain, BBC Radio 4, and BBC Radio 5 Live as an expert on everything from renewable energy to government policy and space travel's carbon footprint, and regularly attends Grand Designs Live as a Green Living Expert, giving bespoke advice to members of the public about heat pumps and solar panels.

Josh has also used the journalistic skills he developed at The Jewish Chronicle and PinkNews to investigate and analyse every green government grant in existence, and examine the impact on the climate of cryptocurrency, Glastonbury Festival, and the World Cup.

You can get in touch with Josh via email.

More about