As the price cap increases by 6.4%, millions of Britons will be paying more for their energy.

After Ofgem announced that its domestic price cap will rise by 6.4% in April due to the soaring wholesale prices of energy, millions of Britons are expected to pay more for their energy.

This is the third consecutive quarter that the price has risen. It's a major blow to the government which has set reducing energy costs as one of its goals. This comes on the heels of higher than expected inflation numbers for January.

Ofgem has increased its cap for electricity and gas usage to 1,849 pounds per year ($2,334.18), up 111 pounds or 6.4% from the previous cap of 1,738 pounds.

The benchmark British gas price hit a 2-year high in early February, as the cold temperatures caused a high withdrawal from Britain's and Europe’s gas stores. This was after the deal to supply Russia with gas via Ukraine ended at the end the year.

Ofgem's formula for calculating the price cap includes wholesale gas and electricity prices.

Ed Miliband, Britain's Energy Minister, said that the government was working to reduce the country's dependence on fossil fuels. The Warm Home Discount offers 150 pounds per person on benefits towards their winter energy bills.

He said: "Alongside that, the only way to achieve energy security and to bring down bills is to complete our mission of making Britain a superpower in clean energy- using clean power produced at home by us Brits."

Britain's goal is to decarbonise the electricity sector by 2030, and reduce its use of natural gas that currently supplies around a third its energy.

Campaign groups have called for the government to provide more assistance for households in need, for example by launching a scheme of help-to repay for those who are in debt.

Analysts at Cornwall Insights predicted that based on the current wholesale energy price, the cap would fall to 1,756 pound per year in July. However, they cautioned that the volatile market could cause the forecast to change several times before the next level of cap is determined.

(source: Reuters)