Thursday, December 23, 2021
The smoking gun facing consumers in the new year
As if we needed yet nore bad news, the Guardian reports that energy bills could rise as much as 50% in the spring as the UK faces a “national crisis” over soaring wholesale gas and electricity prices.
The paper says that the trade body Energy UK has called on the government to intervene to help cut the cost of bills as these price increases drive dozens of energy companies out of business:
“Domestic energy prices are going to go up 45% to 50% in the spring,” warned Emma Pinchbeck, the chief executive of Energy UK, speaking on BBC Radio 4’s Today programme on Thursday.
“It is looking pretty serious for the spring. This is a system-wide issue now. We are asking for the Treasury in the UK to intervene as others have [in Europe],” Pinchbeck said.
While wholesale prices continue to climb steeply, the UK’s price cap on energy bills stops companies from immediately passing those costs on to their customers. Since 1 October, the price cap, set by the industry regulator, Ofgem, has been set at a record £1,277. It is due to change on 1 April when Ofgem is set to raise the cap significantly, which will in turn result in consumers’ bills rising significantly.
“We have had record-breaking gas prices across Europe since September and over the last couple of weeks prices have spiked again and they are at levels we frankly have not really faced in the industry,” Pinchbeck said. “Particularly not in a winter period, with the UK in the middle of a pandemic, and other cost of living issues and inflation.”
Pinchbeck said that only about a fifth of a consumers’ energy bill in the UK is in the control of suppliers. The government sets other costs such as VAT and green energy levies, which could be reduced to help domestic customers.
“A significant proportion of the bill is policy costs,” she said. “Many other governments across Europe have reduced taxes or VAT on bills. In the UK that would save around £90 per customer. There are also policy costs on energy bills that government was consulting on removing, on electricity bills primarily, they could bring that forward. That saves about £190 per customer.”
Will the government act to alleviate this burden on already over-stretched consumers? Do they even care? I'm off to find a fixed price deal, I suggest you all do the same.
The paper says that the trade body Energy UK has called on the government to intervene to help cut the cost of bills as these price increases drive dozens of energy companies out of business:
“Domestic energy prices are going to go up 45% to 50% in the spring,” warned Emma Pinchbeck, the chief executive of Energy UK, speaking on BBC Radio 4’s Today programme on Thursday.
“It is looking pretty serious for the spring. This is a system-wide issue now. We are asking for the Treasury in the UK to intervene as others have [in Europe],” Pinchbeck said.
While wholesale prices continue to climb steeply, the UK’s price cap on energy bills stops companies from immediately passing those costs on to their customers. Since 1 October, the price cap, set by the industry regulator, Ofgem, has been set at a record £1,277. It is due to change on 1 April when Ofgem is set to raise the cap significantly, which will in turn result in consumers’ bills rising significantly.
“We have had record-breaking gas prices across Europe since September and over the last couple of weeks prices have spiked again and they are at levels we frankly have not really faced in the industry,” Pinchbeck said. “Particularly not in a winter period, with the UK in the middle of a pandemic, and other cost of living issues and inflation.”
Pinchbeck said that only about a fifth of a consumers’ energy bill in the UK is in the control of suppliers. The government sets other costs such as VAT and green energy levies, which could be reduced to help domestic customers.
“A significant proportion of the bill is policy costs,” she said. “Many other governments across Europe have reduced taxes or VAT on bills. In the UK that would save around £90 per customer. There are also policy costs on energy bills that government was consulting on removing, on electricity bills primarily, they could bring that forward. That saves about £190 per customer.”
Will the government act to alleviate this burden on already over-stretched consumers? Do they even care? I'm off to find a fixed price deal, I suggest you all do the same.
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One thing the government can do is to remove the "carbon tax" from national grid charges. This penalises companies providing electricity wholly from renewable sources along with the rest.
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