Energy bills likely to rise by ?800 in October, says Ofgem chief

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Ofgem is on course to raise the cap on household energy bills to about ?2,800 in October, the regulator’s chief executive, Jonathan Brearley, has told MPs.

The shock increase in the cap would push up the average bill by more than ?800, after the regulator increased it by ?693 in April to ?1,971.

Brearley told parliament’s business, energy & industrial strategy committee that the figure was provisional, but was based on the most accurate estimate at the moment.

He said he would be writing to the chancellor, Rishi Sunak, this afternoon to confirm that the soaring cost of wholesale gas, which has risen by as much as 10 times the normal price in recent months, and a spike in electricity costs, were to blame for the increase.

Kwasi Kwarteng is also due to appear at the all-party committee to explain the role of his business department in the energy price crisis and answer questions about what ministers could have done to limit the increase this year.

The former Ofgem chief executive Dermot Nolan told MPs earlier in the session that the regulator could have stopped some of the sector’s failures “if we had moved faster”.

Nolan, who headed the regulator between 2014 and 2020, told the committee that the “body politic” wanted Ofgem to prioritise competition over regulatory supervision because of the big six firms’ enduring share of the market, which was 98-99%.

Nolan said that from about 2015, many new firms entered the market under a “permissive” regime “encouraged by government but also a conscious decision of the Ofgem board”.

However it became apparent from 2017-18 that “in certain cases firms had entered the market in a speculative manner that was probably not reasonable, not fair and we needed to do something about it”.

Nolan said: “I don’t think any regime would have been entirely fit for purpose, but I do accept that if we have moved faster we would have stopped some of the failures that have happened.”