Ears are growing that Britons could soon face a second big increase in their energy bills in just 12 months as electricity prices soar.
The high prices will raise fears that Ofgem, the energy regulator, will be forced to announce another large increase in the energy price cap when it examines the market early next year.
“Customers will feel it and it will trickle down to bills if this continues,” said Henry Edwardes-Evans, energy analyst at S&P Global Platts.
Ofgem reviews the energy market every six months to set price caps based on wholesale energy prices and inflation. In August, the regulator announced a huge £ 139 price cap increase, blaming record gas prices. The increase, which takes effect next month, will affect 15 million people in the UK.
Natural gas prices have risen further since Ofgem’s summer review and this increase could lead to a further rise in prices if prices remain at current levels.
“Gas prices appear to be skyrocketing due to a number of factors: relatively low storage levels and the need to recharge, the proximity of colder periods, uncertainty over physical supplies and infrastructure and the potential to demand greater use of gas production to make up for the loss of 1 GW of interconnection with France after yesterday’s fire, ”said Arran Train, CEO of Energy24. “As it stands, there is a lot of uncertainty about each of these factors, so it’s unclear what the longer-term impacts might be.”
Very high gas prices cause problems for businesses as well as customers. Small energy companies went bankrupt after locking customers on fixed tariffs that were no longer sustainable at current energy prices. Utility Point and People’s Energy both went bankrupt this week. Edwardes-Evans said others would likely fail in the coming months, although large operators like British Gas would have to get by.