Ofgem this morning confirmed it will release tomorrow at 11:00am its new calculation of the default Price Cap on retail tariffs for domestic energy.
Industry expectations are that the independent regulator will authorise a rise adding up to 50% or around £650 on the average £1,277 household bill. The new cap will take effect from 1 April 2022.
Ofgem broke the news this morning in a one-line announcement on its website. As reported in the Guardian, the regulator is bringing forward its statement from next week in a bid to quell growing concern among charities, fuel poverty advisors and household bill payers.
The regulator calculates the default price cap twice every year. In response to widespread criticism from the energy industry, and in the wake of last year’s fivefold rise in wholesale market prices for gas used in power generation, Ofgem boss Jonathan Brearley announced in November a one-month consultation for broader, deeper reform of the mechanism.
Two weeks ago energy secretary Kwasi Kwarteng recommitted the government’s support for the measure.
Tomorrow’s number is certain to be the biggest jump in the default price cap since it was introduced in 2019. Ofgem raised it by 12% in August for the period from October 2021 to March 2022 to reflect higher wholesale prices.
Industry chiefs have been in talks with D-BEIS and Treasury officials since before Christmas. Chancellor Rishi Sunak and Kwarteng have revealed few details on how the discussions have progressed.
But observers report that Whitehall is tending towards a combination of long-term low interest loans granted to suppliers, plus greater direct cash grants to low-income consumers.
In December Citizens Advice’s consumer service supported double the number of people who’d run out of money to top up their prepayment meter, compared to the same time in 2020.