Chris O'Shea, the boss of British Gas-owned Centrica PLC (LSE:CNA) has issued a blunt warning that energy prices will stay high for the foreseeable future.
O’Shea warned that instability in Russia and Chinese economic activity still had a large part to play in wholesale gas prices, which determine other costs.
"I think that there's a danger that we get complacent because last winter was okay and because prices are quite stable now," he added, “there could be more volatility to come”.
O’Shea pointed out that energy bills were still far higher than the long-term average and a return to normality was still a long way of despite Ofgem’s price cap being forecast to fall again in October,
"I think what we've got to remember is the energy prices had more than doubled before Russia invaded Ukraine,” he said on Friday while discussing the Rough gas storage facility.
“Now, prices are back down to pre-invasion levels but they're still two and a half times the long-run average [...] I think the first act of the crisis is over.”
Ofgem’s cap, which determines how much suppliers can charge per unit of energy, will ensure a typical energy-using household pays the equivalent of £2,074 per annum from July 1.
This is double what a household would have been paying under Ofgem’s first price cap, which was introduced in early 2019 before the pandemic and war in Ukraine drove prices up.
According to consultancy Cornwall Insight, the cap should then fall to £1,978 in October - its lowest since April 2022 – before rising to £2,004 in January.