Households are likely to see another “significant” rise in energy prices when the new price cap is set in April next year as a result of the “unprecented” increase in gas prices, regulator Ofgem warned.
Domestic customers are already facing a GBP139 increase to their annual energy bill following the latest cap, which came into effect on 1 October.
Speaking at the Energy UK annual conference, Ofgem chief executive Jonathan Brearley said gas prices are six times higher than a year ago and have more than doubled in the last month.
“It is hard to predict how long gas prices will stay high, but we do expect continued significant upward pressure on prices as a result,” he said.
Brearley said the price cap will have to adjust over time to reflect the recent changes to fuel costs.
“Looking at the costs that are in the system, we are expecting a significant rise in April,” Brearley told BBC Radio.
So far this year, 12 companies have had to exit the energy market, forcing over 2 million customers to change supplier, and Brearley said that given the volatility in the market it is likely that more suppliers will have to leave.
Brearley told the BBC that the price cap was there to stop firms making unfair profits, but “legitimate costs have to be passed through”.
He said it was too early to say how much the rise in April would be or whether Ofgem would have to review the price cap more frequently in future.
The BBC cited analysts Cornwall Insight as saying that the energy price cap could go up by as much as GBP400 a year from April next year.