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Energy price cap to rise to £2,800 in October Energy price cap set to rise to £2,800 in October
(32 minutes later)
The boss of the UK's energy regulator has warned that the energy price cap is expected to rise to around £2,800 in October.The boss of the UK's energy regulator has warned that the energy price cap is expected to rise to around £2,800 in October.
Jonathan Brearley told MPs that the price cap, now at £1,971, would increase by nearly £1,000, due to continued volatility in the gas market. Jonathan Brearley told MPs that the price cap, which is currently at £1,971, will increase due to continued volatility in the gas market.
He said the price rises were a "once in a generation event not seen since the oil crisis in the 1970s".
The Ofgem chief executive apologised and pledged to "fix" the energy market.
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The energy price cap is the maximum price per unit that suppliers can charge customers.
It has already risen sharply in April, meaning that homes using a typical amount of gas and electricity are now paying an extra £700 per year on average.
While Mr Brearley said that Ofgem was only part way through reviewing prices ahead of the change in autumn, he said: "We are expecting a price cap in October in the region of £2,800."
He said that conditions in the global gas market had "worsened" following Russia's invasion of Ukraine, which has led to concerns of potential supply issues.
And Mr Brearley warned that the price cap could rise beyond £2,800 if Russia - one of the world's largest exporters of natural gas - decided to disrupt supplies.
"We are really managing between two versions of events," he said. "One where the price falls back down to where it was before, for example if there's peace in Ukraine, but one where prices could go even further if we were to see, for example, a disruptive interruption of gas from Russia."
Europe is reliant on Russian gas and gets about 40% of its natural gas from Russia, so sudden supply cuts could have huge economic impact.
While the UK would not be directly impacted by supply disruption as it imports less than 5% of its gas from Russia, it is affected by prices rising in the global markets as demand in Europe increases.