UK: Ofgem To Raise Energy Price Cap To $4k

Facts

• The UK's top energy regulator, Ofgem, has announced that the energy price cap will increase by 80% to £3,549 ($4,189) from the start of October.¹
• The price cap - reviewed twice yearly - sets limits on how much retailers can charge for gas and electricity. It's not a strict upper limit, but rather reflects the yearly average consumption of UK households.²
• Starting January, the price cap will be updated quarterly to allow Ofgem to respond more quickly to changes in wholesale prices. Industry analysts predict the cap reaching £6K or even £6.6K in the winter and early spring.³
• The news comes as UK households struggle amid rising living costs and spiraling inflation, which exceeded 10% last month and is set, by some estimates, to reach 18% in January.⁴
• The situation is putting further pressure on politicians to act to mitigate the effect on consumers. The victor of the leadership election to determine who will replace Boris Johnson as PM is expected to announce a plan after its conclusion on September 5.⁴
• Conservative Chancellor Nadhim Zahawi has said that, while the government must impose measures to protect the poorest, we all must 'look at' our energy consumption. Opposition leader Sir Keir Starmer accused Johnson's administration of being 'missing in actions.'⁵

Sources: ¹Business Insider, ²Sky News, ³Spectator (UK), ⁴Guardian and ⁵BBC News.

Narratives

• Left narrative, as provided by Guardian. Downing Street has shown a dereliction of duty at a time when ordinary people are struggling to afford basic necessities. The Conservative Party must stop prioritizing its own leadership election and must start acting to protect the most vulnerable from the effects of corporate greed and privatized public services.
• Right narrative, as provided by Spectator (UK). Despite the assertions of the Labour Party, the government cannot control the international energy market. Gas and electricity companies aren't profiteering - the invasion of Ukraine has driven up wholesale costs and the cap has even forced dozens of companies to go under by keeping prices artificially low for consumers. Johnson's administration cannot be held responsible for these circumstances.
• Narrative C, as provided by New Statesman. It's not just Russia pushing up energy prices but the effects of climate change. The UK is a net importer of energy from nations like Norway, Belgium, and the Netherlands, but they have been hit by drought, forcing down their energy production. To mitigate the cost of living crisis we must look not only to geopolitics but to addressing climate change.