News

Gas and electricity bills could rise to £2,000 a year as the ceiling on energy prices doubled in months


Households have warned that gas and electricity bills for millions of Britons could rise to a record £2,000 a year from next year, as the cap on energy prices is set to double in the coming months.

Households could face a 56 per cent rise in their energy bills from April after unprecedented wholesale costs forced Ofgem to raise its price cap.

Investment bank Investec has said Britain’s energy price cap should be raised to £1995 a year per household from April when the next regulator changes the limit, the Financial Times reports.

The current cap has been set at £1,277 a year per household since October, meaning Britons could have to spend more than £700 a year unless the government or Ofgem introduce ‘mitigating measures’.

The energy market sank into chaos after wholesale gas prices rose 500 percent in less than 12 months as a result of increased energy demand, lower gas exports from Russia and lower supply from France.

Twenty-five suppliers have collapsed since the end of the summer, affecting more than four million households.

Gas and electricity bills for millions of Britons could rise to a record £2,000 a year from next year as the cap on energy prices is set to double in the coming months, households have been warned (stock image)

Twenty-five suppliers have collapsed since the end of the summer, affecting more than four million households

Twenty-five suppliers have collapsed since the end of the summer, affecting more than four million households

25 British energy companies have gone bankrupt so far

  • NEON ENERGY LIMITED
  • Limited social power supply
  • compressed natural gas energy
  • Omni Energy Limited
  • Master Energy Limited
  • Zebra Power Ltd.
  • Emporock Ltd.
  • Bluegreen Energy Services Limited
  • Goto Energy Co., Ltd.
  • Daligas Limited
  • Pure Planet
  • Colorado Energy
  • Igloo Energy
  • Symbio Energy
  • Entroga
  • Avro Energy
  • Green Supplier Co., Ltd.
  • benefit point
  • people energy
  • PFP . energy
  • Money Plus Energy
  • axis power
  • energy lure
  • orb energy
  • augmentation energy

The largest company to go bankrupt so far is Bulb, whose 1.7 million households have made it one of the largest suppliers of energy in the country.

Martin Young, an analyst at Investec, told The Times: “With wholesale commodity prices continuing to rise, we suggest the tariff ceiling could rise by 56 per cent to £2,000. [a year] for the summer of 2022.

Young suggested that rising wholesale energy costs would represent £560 of the rise, while £72 would reflect the cost of supplier failure.

“[It will come as] A shock to many, it has implications for discretionary spending, inflation and fuel poverty,” Young told the newspaper.

He also told the Financial Times that “an increase of this magnitude is likely to have political repercussions.”

The warning comes just days after experts warned that families could face quarterly energy bill increases as part of plans to fix the price cap.

More than 15 million households are protected by the cap, which limits the amount companies can charge customers for standard variable deals. However, with no cheap fixed deals left, millions more could be moved to standard tariffs over the next few months.

Ofgem retracts the cap, currently £1,277 a year for the average family, twice a year.

Consultations on possible changes will end in February, and can be carried out at the beginning of April, when the price ceiling is set on the change.

Energy chiefs earlier this month blamed the Ofgem price ceiling for causing “huge price increases” after a charity for the poor warned that raising the cap next spring could double the cost of heating the average home since April. the past.

Criticizing Ofgem’s role during the current crisis, Bill Boleyn, founder and CEO of energy supplier Utilita, told Radio 4’s Today that “we can’t avoid the fact that we are in this position due to some very serious regulatory failures. “.

The UK’s energy trade body said the government could help reduce the increase in April by spreading out the costs of bailing out customers of bankrupt suppliers.

Energy chiefs blame 'huge price increases' on 'very serious regulatory failures' by Ofgem (stock image)

Energy chiefs blame ‘huge price increases’ on ‘very serious regulatory failures’ by Ofgem (stock image)

“Right now, people are insulated from higher wholesale prices, but we’re really worried about what’s going to happen in April,” Audrey Gallacher, retail director at Energy UK, told the Financial Times.

Most households in the UK pay for gas and electricity together in a dual-fuel deal, with those paying a standard tariff usually protected by the Ofgem price cap.

The government regulator introduced a maximum delay in the impact of price hikes on household bills. The system was bottomed out in October last year when energy prices were low, but it has risen twice since then and seen its biggest-ever increase two months ago.

The energy companies that have collapsed in recent months claim that Ofgem’s price cap has created an unmanageable market. They claim that the system prevented suppliers from passing on increased costs to customers, rendering them unable to continue.

As their customers have been moved to tariffs with other suppliers in line with the price cap, hundreds of thousands of people with flat rates who might have expected protection from price hikes will now also be affected by the April cap.

Energy prices have skyrocketed globally due to a series of problems swirling around the world. The increased demand from economic reopening was coupled with higher demand from China, and a summer that was less windy than usual.

Cornwall Insight analysts also expected an increase to £1,925 a year per household from April, while Citizens Advice warned earlier this month that bills could rise to £1,891.

Thomas Rodgers, European gas analyst at Icis, told The Times that wholesale gas prices are rising due to “cooler-than-average weather across the continent depleting already low stocks” in storage.

Wholesale energy prices reached the second highest level in at least three years on November 15, adding pressure on already struggling companies.

Low wind speeds before the arrival of Storm Arwen have been blamed for driving wholesale energy prices for the peak period between 5pm and 6pm above £2,000 per megawatt-hour. This was only the second time they had exceeded this level since 2018.

Because of these lower wind speeds, the UK’s electricity grid has had to switch to gas and coal to power homes and businesses.

Russia, a major supplier of gas to Europe, has been accused of limiting supplies to pressure the European Union to agree to a new pipeline bypassing Ukraine. Experts warn that this move may have an indirect effect on Ukraine, which has become a region of tension between Russia and the West.

Wholesale gas prices fell in Europe last month after the resumption of Russian gas flows to Germany. Moscow has pledged to boost supplies and ease concerns about shortages and higher prices ahead of winter.

Moscow has begun pumping gas to Germany again via a pipeline from Yamal in Siberia, a day after exports were halted and prices soared in Europe.

Russia provides a third of Europe’s gas needs, and its supply intentions are critical at a time when rising spot prices have affected homes and businesses alike in Europe, underscoring Europe’s heavy dependence on Moscow for its energy supplies.

Russian President Vladimir Putin ordered state gas company Gazprom (GAZP.MM) this month to increase supplies to Europe and rebuild its stocks there once local storage tanks were replenished.

Moscow has denied withholding supplies from Europe to pressure German regulators to agree to gas shipments via the new Nord Stream 2 gas pipeline under the Baltic Sea.

Germany has until early January to ratify the pipeline.

“Throughout the unprecedented increase in global gas prices, our primary goal has been to protect consumers,” a government spokesman said.



Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button