The price cap will hit £1,923 in October, the second-highest level since the crisis began. But a hidden variable in that number is the cost of electricity imports through undersea cables known as interconnectors. Ofgem has now warned traders against gaming that market, as reported by the Financial Times. The regulator’s intervention matters to every household on a standard variable tariff.
Why interconnectors matter to your bill
Britain has eight interconnectors linking its grid to France, Belgium, Norway, Denmark, and the Netherlands. When the wind blows hard in the North Sea, cheap excess power flows here and lowers wholesale prices. On still days, the UK exports gas-fired electricity. Ofgem estimates these cables saved consumers £1.2 billion in 2022 alone, about £40 a year per household. But the system depends on traders bidding honestly on day-ahead markets. If they collude to buy cheap power and sell it back at inflated prices, the savings evaporate.
The gaming risk, and what Ofgem is doing
Ofgem’s warning, issued to all licensed interconnector operators, targets “exploitative trading strategies” that could distort prices. The regulator has not named specific firms, but the Financial Times reports that officials are examining patterns of bidding on the French and Belgian links. The catch is that enforcement is tricky: interconnector trades happen across borders, and the European Union’s REMIT regulation governs market abuse. Ofgem can fine UK-licensed traders up to 10% of global turnover, but cross-border cases take years. What this misses is the cumulative effect on household bills. If interconnector costs rise by even 2%, that adds roughly £30 to the annual bill of a typical 3-bed semi using 12,000 kWh, money that could go towards insulation or a heat pump survey.
What homeowners should watch
Ofgem’s warning is a signal that the wholesale market may be less efficient than assumed. For homeowners, the direct action is limited, you cannot switch interconnector providers. But the indirect effect is real: if interconnectors fail to deliver cheap imports, the UK will burn more gas, keeping carbon intensity high and delaying the grid decarbonisation that makes heat pumps and EVs cheaper to run. The Energy Saving Trust notes that every 1p/kWh rise in wholesale electricity adds about £70 to a typical annual bill. Households should lock in fixed tariffs now if they can, many are available at 5–10% below the price cap, and consider solar panels to hedge against grid volatility. Ofgem’s enforcement action may protect savings, but the best protection is generating your own power.
Who pays for enforcement gaps
The regulator’s warning is necessary but not sufficient. Ofgem has only 12 staff monitoring wholesale markets, according to its 2023 annual report. Compare that to the FCA’s 1,000-plus market surveillance team. The gap means gaming can persist for months before detection. Households on prepayment meters, often the most vulnerable, have no way to absorb even a £15 annual shock. The government’s Energy Price Guarantee ended in June 2023, leaving the price cap as the sole shield. Ofgem must back its warning with actual fines and, ideally, a real-time interconnector price dashboard that lets consumers see whether imports are genuinely cheap. Until then, every household should treat the interconnector as a black box that can either lower or raise their bill, and plan accordingly.
Frequently Asked Questions
No. Interconnector costs are baked into wholesale prices that all suppliers pay. Switching to a fixed tariff may protect you from price cap rises, but it won't remove the impact of gaming. The best defence is reducing your overall electricity use through efficiency measures.
Unlikely. The warning is a deterrent, not a price cut. Any enforcement action would take months or years. Households should not expect an immediate drop in the price cap, but tighter oversight could prevent future increases of £15–£30 a year.
