British household energy bills are set to climb in April after regulator Ofgem said it would lift the price cap by 6.4 per cent following an increase in wholesale costs.
The regulator on Tuesday set the price cap at a level for the period between April and June that would see a typical household pay £1,849 a year, up from £1,738 now.
The rise marks the third straight quarterly increase in the cap, adding to the pressure on households grappling with the cost of living. A spell of cold weather helped drive up wholesale prices.
The price cap, introduced in 2019, sets a limit on how much energy companies can charge homes on default tariffs per unit of gas and electricity consumed. It is reset every three months to reflect changes in wholesale prices.
The regulator’s move is a blow to the government, which is contending with a rebound in inflation and anaemic economic growth.
Households bills have fallen steeply from the peak of £4,059 hit in early 2023, but remain hundreds of pounds higher than before the energy crisis that started in late 2021. Gas shortages later worsened following Russia’s full-scale invasion of Ukraine in 2022, sending energy prices soaring.
The latest increase will also deepen fears over the affordability of energy as Ofgem figures showed households had built up a record £1.6bn in arrears to their suppliers by the end of September last year.
It comes as Ofgem has proposed reforms that would require energy suppliers to offer tariffs without a standing charge.
Energy consultancy Cornwall Insight expects gas prices to fall slightly in the third quarter of this year, before climbing again in October as the onset of colder weather boosts demand.