From April, millions of households across Britain will face higher energy costs as Ofgem, the energy regulator, raises its domestic price cap by 6.4%. The increase is driven by soaring wholesale

energy prices.

This marks the third consecutive quarterly rise, posing a challenge for the government, which has prioritized efforts to lower energy costs. The announcement follows unexpectedly high inflation figures for January.

Under the revised cap, the average annual energy bill for gas and electricity will increase to £1,849 ($2,334.18)—an increase of £111 from the previous cap of £1,738.

The rise in wholesale energy prices has been influenced by several factors, including a cold snap in early February that led to higher-than-usual withdrawals from gas reserves in the UK and Europe. Additionally, the expiration of a key agreement to transport Russian gas via Ukraine has added to market pressures.

Ofgem determines the energy price cap using wholesale gas and power prices as a key component in its calculation. Photo by Ichbinameya, Wikimedia commons.