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British Gas owner Centrica warms up as UK regulator raises price caps

Ofgem said it was upping the limit to allow suppliers to cover the higher costs they are facing on the wholesale market
gas hobs
The 11mln or so UK households on default tariffs will see their annual bills rise by around £117 on average

British Gas owner Centrica PLC (LON:CNA) was among the top blue-chip risers in London on Thursday after the UK’s energy regulator raised price caps.

The new cap, introduced by Ofgem, means more than half of British households could see their bills rise by around £117 a year on average.

Ofgem, which sets the maximum prices that can be charged for gas and electricity to those on default tariffs, said it was upping the limit to allow suppliers to cover the higher costs they are facing on the wholesale market.

READ: Centrica dividend cut ‘inevitable’, claim RBC analysts

Oil prices have risen steadily over the past few years. Back at the end of 2015, the cost of a barrel of the black stuff fell to below US$30, but it has since climbed back up to just above US$60.

“We can assure these customers that they remain protected from being overcharged for their energy and that these increases are only due to actual rises in energy costs, rather than excess charges from supplier profiteering," said Dermot Nolan, chief executive of Ofgem.

The cap is per unit of energy and not on the total bill, so people who use more energy will still pay more than those who use less.

It comes into force at the start of April and will be reassessed every six months.

Shares in Centrica, Britain’s largest energy supplier, climbed 1.1% to 139.8p on Thursday morning.

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