Energy bills in Britain are set to start rising again this autumn, the sector regulator announced on Friday, sparking fears that fuel poverty will worsen amid an ongoing cost of living crisis.
The cost of household electricity and gas had been falling from peaks reached after Russia’s invasion of Ukraine that contributed to the soaring cost of living.
But energy market regulator Ofgem said the price cap that suppliers can charge customers will increase by 10% from October, adding around 12 pounds ($15) a month to the average bill.
It blamed the jump on severe weather events and conflicts such as the war in Ukraine.
A typical household bill will rise to about 1,717 pounds per year, Ofgem, which sets the cap every quarter, detailed in a press release. It had issued reductions in April and July.
The regulator cited “rising prices” on international energy markets due to “increasing geopolitical tensions and extreme weather events driving competition for gas.”
It said that despite the rise for the October to December quarter, the cap will still be 6% lower than for the same period last year.
It will be almost half as low as at the height of the energy crisis in 2022 following Russia’s invasion of its neighbor in February of that year, Ofgem added.
But National Energy Action, a U.K. fuel poverty charity, warned that the increase would “plunge 400,000 more U.K. households into fuel poverty this winter,” taking the number to 6 million.
The charity said the problem would be compounded by U.K. Treasury chief Rachel Reeves’s recent decision to scrap winter fuel subsidies for 10 million older citizens.
Friday’s rise of 10% for a typical dual-fuel household was slightly above analysts’ forecasts. Energy consultancy Cornwall Insight said on Monday the cap was expected to rise 9% due to gas and electricity wholesale market prices, which have rebounded over the past few months.
“While prices have stabilised somewhat compared to the previous two years, the market has not fully recovered from the energy crisis and the impact of Russia’s invasion of Ukraine,” the consultancy said.
Energy Minister Ed Miliband acknowledged that the cap rise “will be deeply worrying news for many families,” pinning the blame on the Conservative government ousted by Labour in last month’s election.
He said the “failed energy policy” the Labour inherited left the country “at the mercy of international gas markets controlled by dictators.”
“We will also do everything in our power to protect billpayers, including by reforming the regulator to make it a strong consumer champion,” he added.
Jonathan Brearley, Ofgem chief executive, said the price rise was “driven” by Britain’s “reliance on a volatile global gas market that is too easily influenced by unforeseen international events and the actions of aggressive states.”
“We know that this rise in the price cap is going to be extremely difficult for many households,” Brearley said.
Labour has pledged to reduce the U.K.’s dependency on foreign energy through a publicly owned body called Great British Energy that intends to spur investment in domestic renewable projects.
Britain introduced an energy price cap for consumers in 2019. The average cost hit a high of 4,279 pounds in January 2023 as Russia’s invasion of Ukraine sent shockwaves through energy markets.
Simon Francis, coordinator of the End Fuel Poverty Coalition, said energy bills remained 65% higher than before the crisis.
