LONDON (ShareCast) - (Sharecast News) - The UK's energy regulator is increasing its cap on consumer prices to pre-pandemic levels after a big jump in wholesale prices.

From April the maximum charge for 11m default tariff customers will increase by £96 to £1,138, Ofgem said. The cap will rise by £87 for 4m prepayment meter customers.

Wholesale energy prices plunged in the first half of 2020 as Covid-19 lockdowns hammered demand, prompting Ofgem to reduce the price cap by £84 in October to its lowest level for winter. Demand has recovered, pushing wholesale prices back nearer to normal levels.

Ofgem adjusts the price cap twice year to reflect the cost of supplying electricity and gas to households and make sure providers are not charging unfair prices. The cap saves households a total of £1bn a year, the watchdog said.

Jonathan Brearley, Ofgem's chief executive, said consumers should shop around for cheaper deals to make sure they are saving as much money as possible.

Brearley said: "Energy bill increases are never welcome, especially as many households are struggling with the impact of the pandemic. We have carefully scrutinised these changes to ensure that customers only pay a fair price for their energy."

Shares of British Gas owner Centrica rose 2.1% to 52.54p at 09:20 GMT and rival energy supplier SSE rose 0.5% to £14.89.5.

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