By Susanna Twidale
LONDON (Reuters) -Millions of British households will see energy bills edge higher next year after regulator Ofgem said it would increase its domestic price cap by 0.2% from January due to higher policy costs.
The rise, though small, will be a blow for the government which has pledged to reduce energy prices and is under pressure to next week unveil measures in the budget to help cut household bills.
The rise is partly due to the addition of a nearly 1 pound per month cost added to bills to help pay for the new Sizewell C nuclear plant which is expected to cost some 38 billion pounds ($50 billion) and comes despite a 4% fall in wholesale energy costs.
Wholesale gas and power prices are a major part of the formula Ofgem uses to calculate the price cap, but network and policy costs are becoming a larger part of the bill as the network is upgraded and more social and environmental levies are added to bills.
The new cap of 1,758 pounds ($2,300) a year for average use of electricity and gas is up around 3 pounds from the previous cap for the period from October to the end of December.
($1 = 0.7639 pounds)
(Reporting by Susanna Twidale in London, Raechel Thankam Job and Yadarisa Shabong in Bengaluru; Editing by Sherry Jacob-Phillips, Rashmi Aich and Conor Humphries)
