LONDON (Reuters) – Britain’s energy regulator Ofgem said on Friday the cap on domestic energy prices would rise to 3,549 pounds ($4,188.17) a year from the start of October due to soaring wholesale costs, increasing pressure on already-stretched household budgets.
PREVIOUS AND FORECAST PRICE CAP LEVELS
The price cap has more than tripled in the last two years. Below are the price cap levels since October 2020. From October 2022 the cap will be reviewed quarterly rather than every six months:
Oct. 2020 – March 2021 – 1,042 pounds per year
April 2021 – Sept. 2021 – 1,138 pounds per year
Oct. 2021 – March 2022 – 1,277 per year
April 2022 – Sept. 2022 – 1,971 per year
Oct. 2022 – Dec. 2022 – 3,549 per year
Forecast price cap levels from analysts Cornwall Insights:
Q1 2023 – 5,386.71 per year
Q2 2023 – 6,616.37 per year
Q3 2023 – 5,897.12 per year
Q4 2023 – 5,887.31 per year
GOVERNMENT SUPPORT ALREADY ANNOUNCED:
Prime Minister Boris Johnson and the two candidates vying to replace him — Foreign Secretary Liz Truss and former finance minister Rishi Sunak — have come under pressure to set out further support for households.
Finance minister Nadhim Zahawi said on Friday he was “working flat out to develop options for further support”.
In May, when Sunak was finance minister, the government set out a 15-billion-pound ($17.7 billion) support package to help households, funded in part by a windfall tax on oil and gas companies.
– Energy bills discount
Every household will receive a 400-pound-credit to their energy bills from October. This replaced a previously planned 200-pound rebate on energy bills which had to be repaid over the next five years. The new rebate will not need to be repaid.
– Low-income households
More than 8 million low-income households in receipt of state benefits are also being given a further one-off payment of 650 pounds, paid straight into their bank accounts in two instalments. The first payment, of 326 pounds, was made in July and the second will follow in the autumn.
More than 8 million pensioner households, who already receive a winter fuel payment, will also receive an extra one-off payment of 300 pounds.
– Disabled people
Some 6 million people who receive disability benefits will receive an extra one-off payment from September of 150 pounds, to help with rising costs of things such as energy-intensive medical equipment.
– Household support fund
This fund, which provides money for local authorities to distribute to support vulnerable households, will be increased by 500 million pounds to extend it to March 2023 from October.
WHAT THE CANDIDATES FOR PM HAVE SAID THEY WILL DO:
The result of the leadership contest is due on Sept. 5.
Sunak has promised to cut value-added tax on energy bills and has said he is in no doubt more direct support will be needed to help households through the winter and he would act as soon as it is confirmed how much bills would be increasing by.
Leadership frontrunner Truss has said she does not believe handouts are the best way to help households through the cost-of-living squeeze, and she prefers to focus on tax cuts.
Truss has said she would apply a temporary moratorium on environmental and social levies added to consumers’ electricity bills.
WHAT OTHER COUNTRIES IN EUROPE ARE DOING:
Governments across Europe have set out a variety of measures to help consumers struggling with a sharp rise in power bills.
Countries including Germany and Poland have agreed one-off payments to households, while others such as Norway and Greece are subsidising energy bills. France has committed to capping the increase in regulated electricity costs, while the Netherlands has cut energy taxes for households.
($1 = 0.8474 pounds)
(Compiled by Kylie MacLellan; editing by Mark Heinrich and Jason Neely)