The energy price cap will “inevitably need to reflect” rising costs, chair of Ofgem said
Energy regulator Ofgem has warned of “significant” price rises and more company failures in the light of soaring gas prices.
Speaking at the Energy UK conference on Thursday, chair of Ofgem Jonathan Brearley said that customers will face “an extremely difficult time” as rising costs “are ultimately passed through to bills”.
He also warned that the price cap will be likely to increase, saying that “it is designed to reflect fair costs and therefore will need to adjust over time to reflect the changes in fuel prices”.
European natural gas prices shot to record highs on Tuesday following fears of supply shortages over the winter.
Speaking at what he said was an “unprecedented” time for the energy market, Mr Brearley said that more company failures were to be expected.
He said that the industry had already seen twelve companies fail and that “given the continued volatility of the market it is likely that more suppliers will exit the market”, 追加する: “I appreciate the difficulties of those working in those companies and for their customers.”
The default tariff cap set by regulator Ofgem is currently set at £1,277 but many industry experts are expecting this to increase when it is updated next year.
Mr Brearley signalled that customers will see a jump in the energy price cap, 言って: “While gas prices remain high, the cap will inevitably need to reflect them to allow suppliers to recover their costs. But it is still protecting millions of customers from the full impact and pace of the rising costs of the prices that we are seeing today.”
He also said that Ofgem would be taking more steps to regulate the market, in the light of many companies struggling to deal with gas price hikes. He promised to build a market that was “more resilient” to the volatility that they have been seeing over the past few months.
This would involve continuing to limit the number of new entrants to the sector.
The chair of Ofgem also said that it would be necessary to “diversify” the country’s sources of energy and highlighted an over-dependence on gas.
His comments come as the head of the International Energy Agency said that Russia has the capacity to send substantially more gas to Europe to help alleviate the energy crisis.
と話す フィナンシャルタイムズ, Fatih Birol, the executive director of the IEA said that Russia could increase its exports by around 15 per cent of winter supply.
He said this move could “have a calming effect on the market”.