October 6, 2022

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UK home energy bills jump 80% to over $4,000 a year

UK home energy bills jump 80% to over $4,000 a year

  • Price ceiling of 24 million families rises from October
  • Prices are expected to rise in January
  • Organizer calls for urgent government intervention
  • Labor opposition says: ‘This is a national emergency’

LONDON (Reuters) – Britain’s energy bills will jump by 80 percent to 3,549 pounds ($4,188) a year from October, Britain’s watchdog said on Friday, leaving millions of households running out of fuel and putting businesses at risk unless the government takes action. in.

Jonathan Brilly, chief executive of Ofgem, said the rise would have a massive impact on households across Britain, and another surge was likely in January, as Russia’s move to throttle European supplies pushed wholesale gas prices to record levels.

“This is a disaster,” said Martin Lewis, one of Britain’s leading consumer advocates, warning that people will die if they refuse to cook or heat their homes this winter.

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Brierley said the government’s response must be commensurate with the scale of the crisis with “urgent and decisive” action.

Prime Minister Boris Johnson, who has less than two weeks left in office, said his successor would announce “extra funds” targeting the most vulnerable next month.

“But what I don’t think we should do is try to put a cap on absolutely everyone, the richest families in the country,” he told reporters.

In May, when price expectations were much lower, the government announced a 400-pound ($472) discount on consumer bills for this winter.

The opposition Labor Party has said that if it is in power it will freeze prices, which could cost around £60 billion a year – about the same as the final holiday plan for the COVID pandemic.

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The pressures are being felt across Europe, but in Britain, which is particularly dependent on gas, the price hikes are surprising. Read more

The average annual bill of £1,277 last year will reach £3,549 this year, and forecaster Cornwall Insight has said prices are likely to rise again in 2023.

It expects bills to peak in the second quarter at 6,616 pounds, and households may pay about 500 pounds per month for energy in 2023, an amount higher than rent or a mortgage for many.

The rise pushed inflation to a 40-year high and warned the Bank of England of a prolonged recession. Despite the bleak outlook, Britain’s reaction has been hampered by the race to replace Johnson that runs until September 5 and has focused on the votes of Conservative Party members keen to cut taxes and spending.

A gas cooker is seen in Boroughbridge, northern England on November 13, 2012. REUTERS/Nigel Rhodes

The two candidates – Secretary of State Liz Truss and former Finance Minister Rishi Sunak – clashed over how to respond, with first contender Truss initially saying she would prefer cutting taxes over giving “alms”.

Both sides acknowledged that the poorest people in society will need support, and the government went further on Friday saying families should consider how much energy they use – having previously said people know what to do.

‘national emergency’

The Labor Party said the country was no longer waiting for action. “This is a national emergency,” said finance spokeswoman Rachel Reeves.

Truss and Snack have suggested suspending environmental duties or lowering sales tax — both ideas that analysts dismissed as too little to lessen the big blow to family budgets.

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Wholesale price increases are transmitted to British consumers through a price cap, calculated every three months, which was designed to prevent energy suppliers from profiting but is now the lowest price available to 24 million households.

Such is the volatility of the sector that nearly 30 energy retailers have gone out of business, and Ofgem said most of the local suppliers are not making a profit.

Supplier E-On said Britain should speed up its move away from gas and better insulate its battered Victorian housing stock, while rival Scottish Power urged the government to set up a deficit fund to keep bills low and spread the cost to 10-15. year period.

Ofgem said customers who cannot pay their bills will be offered affordable payment plans by their suppliers.

She added that they would only be forced to move to prepaid counters, which charge above-average rates, “as a last resort”.

Ofgem said the market is too unstable to expect the next maximum for January, but that conditions in the winter gas market mean prices could become “much worse” until 2023.

(dollar = 0.8463 pounds)

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(Reporting by Paul Sandel and Kylie McClellan) Editing by Kate Holton, Jason Neely and Toby Chopra

Our criteria: Thomson Reuters Trust Principles.