Regulator warns energy bills are set to rise further

Energy bills will rise to reflect soaring wholesale energy prices, the energy regulator has warned.

A price cap limits the impact of rising energy costs for customers, but Ofgem said this would increase.

Chief executive Jonathan Brearley said the cap was “designed to reflect fair costs and therefore will need to adjust over time”.

Nine UK energy suppliers collapsed last month and Mr Brearley said more could follow.

“Given the continued volatility in the market, it is likely more suppliers will exit the market,” he told a conference organised by Energy UK.

Natural gas prices are at record highs as economies around the world begin to recover from the Covid crisis.

As a result, firms are running into trouble because they have agreed to sell gas at less than the price it now costs them to buy it.

More than 1.7 million customers saw their energy provider go bust in September.

They have already seen annual bill increases of hundreds of pounds when they moved to a new provider and away from whichever low-rate fixed deal their supplier had offered.