By Jaime Llinares Taboada

 

U.K. energy regulator Ofgem said Thursday that it has raised the country's price cap by 54% to 1,971 pounds ($2,675) per year, and that it will announce further measures to fight market volatility on Friday.

The new price cap for a dual-fuel, direct debit customer represents a GBP693 increase from the current GBP1,277, reflecting significantly higher gas and power prices. Sector analysts had forecast that Ofgem would rise the price cap to around GBP1,900.

The rise will come into force at the start of April and will last for six months, until the end of September. Ofgem reviews the price cap twice a year to reflect wholesale energy prices and other costs that companies face. Last summer, the price cap for the typical customer stood at GBP1,138.

"We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can," Ofgem's Chief Executive Jonathan Brearley said.

The regulator added that it will announce further measures to ease volatility in the energy market on Friday.

On Wednesday, before Ofgem announced the new price cap, trade association Energy UK urged the country's government to protect customers from the sharp increase in bills. "When international gas prices are this high, there is a need for government to act, as other governments already have, to make a real difference to bills and to protect the wider economy," Energy UK's CEO Emma Pinchbeck said.

Trade union GMB said the cost-of-living crisis is a direct result of the U.K. government's energy strategy. "We need a sensible debate about how we meet and pay for our energy, otherwise tens of millions of workers and consumers--not to mention the planet--will continue to suffer," GMB national secretary Andy Prendergast said.

 

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

 

(END) Dow Jones Newswires

February 03, 2022 06:44 ET (11:44 GMT)

Copyright (c) 2022 Dow Jones & Company, Inc.
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