Raising the cap on gas and electricity charges will have a societal impact across Britain – and a political one too
The energy regulator Ofgem sounded apologetic as it announced another big rise in the industry’s price cap on Friday. It was right to do so. It is hard to think of anyone – except the energy companies and the fossil-fuel-producing states – for whom the latest rise is anything other than seriously bad news. These price hikes will have a societal impact across Britain, with serious implications for the economy, the greening agenda and politics too. And they will come as winter begins and as jobs, incomes and household budgets all face fresh uncertainties as pandemic economic protections are eased. Make no mistake. This is a big event. It should not be permitted to pass quietly.
Under the system created by Theresa May to limit rip-off energy bills, the cap rises and falls in six-month cycles as the price of gas changes. Gas prices have risen by around 50% in the most recent period to reach a 16-year high, partly because of resurgent global demand as the pandemic eases and partly because some gas producers are restricting supply to drive prices up. October’s rise comes on top of an average £96-a-year rise which came into force in April. But October’s is significantly bigger – a second whammy of up to £139 (which few companies will try to avoid charging) for the 11m households on default tariffs paying by direct debit, and of up to £153 for the 4m others using prepayment meters.