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Energy price higher than at time of last price cap estimate, Ofgem chief says

·2-min read
(PA) (PA Wire)
(PA) (PA Wire)

The chief executive of Ofgem has said the market price of energy is higher than it was at the time of the last price cap estimate.

In May, the energy regulator predicted that the price cap would reach £2,800 when it is next changed in October.

Speaking to MPs sitting on the Public Accounts Committee on Monday, while Jonathan Brearley refused to say if the cap could reach a figure of over £3,200 – as suggested by experts – he said energy prices appear higher than when Ofgem made its estimate.

Ofgem chief executive Jonathan Brearley said the price of energy is higher than at the time of the last price cap estimate (Ofgem handout) (PA Media)
Ofgem chief executive Jonathan Brearley said the price of energy is higher than at the time of the last price cap estimate (Ofgem handout) (PA Media)

He said: “It’s clear given the pricing dynamics we’re seeing, given the ongoing impact of the Russian invasion of Ukraine, that there is positive pricing pressure there – as in prices are looking higher than they did when we made that estimate – but we don’t give ongoing sort of commentary until we make our formal announcement.”

When Sarah Olney, Lib Dem MP for Richmond Park, asked: “Imagine if it is in the region of £3,200, and that may or not be, but it’s going to be higher..” he answered “yes” before she continued the question “…we know it’s going to be higher than now…”

The energy price cap already ballooned by 54% in April, hitting £1,971 as gas prices soared from last summer.

But since then, gas markets have remained tough for buyers. Last week experts at Cornwall Insight predicted that the cap could reach £3,244 per year from October, and then £3,363 per year between January and March.

The cap is calculated based on the price of gas and electricity on the wholesale market, setting what Ofgem believes is a fair price for suppliers to charge their customers.

However in the face of a European gas crisis, which has seen prices increase substantially, the price cap has gone up time and time again.

The price cap is calculated based on the use of an average household across a whole year. It is changed four times a year.

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