The chief executive of Ofgem says the market price of energy is higher than it was at the time of the last price cap assessment – a warning that the October price cap could be higher than previously forecast.

I have an energy regulator predicted that the price cap would reach £2,800 when it next comes up for review in October.

But on Monday, Jonathan Brearley told the Public Accounts Committee: “Obviously, given the pricing dynamics that we’re seeing, given the lingering impact of the Russian invasion of Ukraine, that there are positive price pressures – as prices look higher than they did when we made this assessment. .

“But we’re not making any ongoing comments until we make an official announcement.”

The energy price cap is based on the wholesale price of gas and electricity.

It is recalculated twice a year, but can change every three months.

The price cap rose by 54% in April to £1,791 and, although Mr Brearley did not give MPs a new forecast, Cornwall Insight experts last week predicted the cap could reach £3,244 a year from October.

Mr Brearley also said there should have been tighter controls on energy companies entering the market, with more than four million customers affected by 28 supplier failures since August last year.

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He told the public accounts committee: “The problem was the ongoing demands on the providers themselves and we admit, in hindsight, that they should have been tougher.

“When we looked at supplier rejections up to September this year, although there were costs, they were nowhere near what we were seeing.

“But the point is that we had a huge increase in wholesale prices, which did two things: it increased the number of suppliers that failed, but it also increased the cost of their failure.

“Now, you know, we recognize that, in hindsight, the controls on financial sustainability could have been stronger and should have been stronger, and equally the design of the price cap should have allowed the market to adapt more freely.”

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There are currently 26 domestic suppliers and Mr Brearley said he could not rule out more failures.

“We’re not out of that yet, so it’s not a retrospective of last winter, we’re still in a transition phase and we have all our enforcement measures and procedures in place.

“But it’s still a challenging market, so it’s possible we’ll see further exits.”

https://news.sky.com/story/energy-prices-higher-than-at-time-of-last-price-cap-forecast-ofgem-chief-says-12650254

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