Millions of UK households will face higher energy bills from April as Ofgem announced a 6.4% increase in the domestic price cap, driven by rising wholesale energy costs.
This marks the third consecutive quarterly increase and poses a challenge for the government, which has committed to reducing energy costs.
The announcement follows higher-than-expected inflation figures for January.
Under the revised cap, the average annual electricity and gas bill will rise to £1,849, up £111 from the previous cap of £1,738.
British gas prices hit a two-year high in early February due to cold weather increasing withdrawals from gas reserves in Britain and Europe. The situation was further affected by the expiration of a deal to transport Russian gas via Ukraine at the end of last year.
Wholesale gas and electricity prices are key factors in Ofgem’s price cap calculations.
Energy Secretary Ed Miliband stated that the government is working to reduce reliance on expensive fossil fuels and is providing support through the Warm Home Discount, which offers £150 per winter to eligible households receiving benefits.
“Alongside this, the way to deliver energy security and bring down bills for good is to deliver our mission to make Britain a clean energy superpower – with homegrown clean power that we in Britain control,” he said.
Britain aims to decarbonise its electricity sector by 2030, reducing reliance on gas, which currently makes up about a third of power generation.
Campaigners have urged more support for vulnerable households, proposing a social tariff or a help-to-repay scheme for those in debt.
Analysts at Cornwall Insight estimate the cap could drop to £1,756 in July but warn that market volatility could alter forecasts.
