Ofgem has warned its price cap is set to jump in October
for those on default tariffs paying by direct debit. This itself was only introduced in April after a 54% jump, or £693 a year, due to rapidly rising wholesale energy costs.
Variable tariffs have previously been more expensive than fixed-rate deals and people are often on these tariffs if they have never switched suppliers, a fixed term has ended or their supplier has gone bust. It would change in April, to cover the summer months when people tend to use less energy, and again in October before an expected increase in usage.
Ofgem also considers the operating costs and profit margin of suppliers. Environmental obligations and taxes can also be considered as part of the price cap figures.The recent surge in energy prices has been driven by wholesale prices, specifically the soaring cost of gas.
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