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UK energy bills to rise by over 50% in April as Ofgem announces hike

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LONDON — Energy bills are set to rise drastically in the U.K. after the country’s energy regulator announced its cap on prices would rise by 50% in April.

There are limits to how much energy suppliers can charge customers in the United Kingdom. Prices caps are reviewed every six months by government.

Ofgem, Britain’s energy sector regulator, said on Thursday that its price cap — under which the average household’s annual energy bill is currently between £1,277 ($1,730) and £1,370 — would be raised by 54%, marking a record-breaking increase.

That means many households could see their energy bills rise by more than £700 a year.

Wholesale natural gas prices reached record highs in Europe last yearThe energy crisis in the region was caused by several issues, including Russia tightening its supply of gas to the EU and low inventories. Many countries continue to struggle with this issue.

Due to its dependence on gas as an energy source, the U.K. has been particularly hit.

Over 22 million British homes are connected to the gas grid. The U.K. Continental Shelf is Britain’s biggest single source of natural gas, accounting for around 48% in total supply as of 2020. But, because the UCS has a mature supply, it will need to be supplemented from gas imports from overseas markets.

U.K. day ahead prices for wholesale natural gas were trading at around £1.75 per therm on Thursday, up slightly from the previous day. Meanwhile, front month contracts gained around 3% to trade at around £1.89 per therm.

Day ahead prices peaked in December, when they rose above £4.50 per therm.

Many of Britain’s largest energy providers collapsed due to high wholesale gas costs. The few that survived have urged the government to raise or remove the price cap.

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