Energy bill warning to all UK households as Ofgem considers hiking price cap

Britain's energy watchdog may apply a one-off increase to the energy price cap in a bid to prevent suppliers collapsing.

Ofgem confirmed it will launch a consultation to examine ways to protect the energy market after debt reached a record £2.6 billion due to rising wholesale prices alongside cost of living pressures on households. One option being considered is a one-off increase to the energy price cap that could result in households paying £17 a year more on average.

This will reportedly "reduce the risk of energy firms going bust or leaving the market as a result of unrecoverable debt". The regulator warned that if action isn't taken, billpayers could face higher costs and worse standards as suppliers are at risk of collapsing due to debt levels.

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Tim Jarvis, director general for markets at Ofgem, said: “We know that households across the country are struggling with wider cost-of-living challenges, including energy, so any decision to add costs to the price cap is not one we take lightly. However, the scale of unrecoverable debt and the potential risk of suppliers leaving the market or going bust, which passes on even greater costs to households, means we must look at all the regulatory options available to us.

“Ofgem cannot subsidise energy or force businesses to sell it at a loss and suppliers must be in a position to offer high-quality services to customers. We must consider the fairest way to maintain a stable energy market and we will do this in consultation with all our partners to ensure we are protecting the most vulnerable