LONDON (Reuters) -British households could face a further increase in energy prices when a price cap is updated again in October, especially if there is a Russia-Ukraine conflict, the chief executive of energy regulator Ofgem said on Tuesday.
Ofgem said last week the price cap, protecting some 22 million households, would rise by 54% from April 1 due to an unprecedented rise in wholesale gas prices over the past year.
“If Russia invades Ukraine that would drive high gas prices and ultimately feed through to customers,” Ofgem Chief Executive Jonathan Brearley told a cross party group of British lawmakers.
Britain only receives around 5% of its gas supply from Russia but lower overall Russian supply to Europe means less could be available from Britain’s largest suppliers as they face tougher competition for supplies from other European providers.
More than 25 energy suppliers have gone bust over the past few months due to the record high wholesale prices, which they were unable to pass on to customers due to the price cap.
Brearley said the regulator should have acted faster in testing the financial resilience of new suppliers coming into the market.
Ofgem has put forward plans for tougher financial checks on energy suppliers has proposed changing the price cap more frequently than twice a year so it can more quickly reflect changes in wholesale energy prices.
Brearley said it was wholesale energy prices, not environmental costs that were the primary reason for the higher prices for consumers, contrary to some suggestions.
The level of April’s price cap is the first where consumers have not had to pay any costs relating to a scheme paying for new renewable electricity generation, Brearley said.
Costs relating to environmental and social costs on an average energy bill will fall by 4% from April, Ofgem data showed.
(Reporting By Susanna Twidale; Editing by Susan Fenton and Jane Merriman)
