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Skyrocketing UK energy prices: Tariffs set to rise 80%

  • Post category:Economy News
  • Reading time:4 mins read

Regulated energy prices will rise by 80% from October in the UK and gas and electricity bills could rise further “significantly” next year amid the crisis in the cost of living.

The energy price cap will rise by 80% from October in the UK, British sector regulator Ofgem announced on Friday, warning that prices could get worse. “considerably” next year given the trend in gas prices. He calls on the government to provide aid “urgent” in the midst of a cost of living crisis.

The ceiling will go from 1,971 pounds per year per average household to 3,549 pounds from October. “The rise reflects the continued rise in global wholesale gas prices, which kicked off with the lockdowns after the Covid pandemic, and were pushed to record highs as Russia slowly cut gas supplies to Europe.” , argues Ofgem.

This threshold being calculated according to the average of wholesale gas prices over the previous months, experts expect it to be raised to more than 4,000 pounds in January and up to 6,000 pounds in the spring according to projections. the most pessimistic, which should fuel inflation already at more than 10% per year in the United Kingdom.

“We are aware of the massive impact this price cap hike will have on households across Britain and the difficult decisions consumers will have to make,” commented Jonathan Brearley, chief executive of Ofgem.

Ofgem clarifies that the cap provides for a “modest” profit for energy suppliers on energy sales to households but that “Unlike energy producers, most distributors are currently not making a profit.”

“We are seeing a very stressful situation among our customers”

Employers, suppliers and associations are calling for immediate government action to avoid a “dramatic” shock for low-income households, already facing inflation at more than 10%, the highest in the G7 countries, while the British economy is in the edge of recession.

According to the University of York, 58% of British households are at risk of fuel poverty by next year.

“We are seeing a situation of very great stress among our customers. The average debt per customer has increased by 30% to 167 pounds. I would say that around a third of our customers are in a situation of fuel poverty and another 20% could become”, underlines Philippe Commaret, commercial director of EDF for the United Kingdom, interviewed by AFP.

He adds that some households take desperate and dangerous measures for them, such as giving up heating or unplugging their refrigerator.

With many precarious households dependent on rechargeable meters, “we left to see thousands (of homes) with sudden power outages”, also denounces the think tank Resolution Foundation.

“My neighbors don’t pay their rent otherwise the electricity and gas are cut off”

Diane Skidmore, a 72-year-old pensioner who lives in social housing in south London on £600 (just over £700) a month, has seen her monthly bill drop from £25 to £45 in just over a year . She has just received a letter from her energy supplier asking her to plan for the next flow rates of 70 pounds. “Everyone is going to have a hard time”, she told AFP, saying her intention to use sweaters and blankets to minimize her energy consumption.

However, she says she is worried about her neighbors whose electricity meter works on pre-payments: “They always find themselves in debt, and suddenly they do not pay their rent otherwise the electricity and the gas are cut”.

“Help Is Coming”

Economy and Finance Minister Nadhim Zahawi also acknowledged that “energy price cap announcements will cause stress and anxiety (…) a lot but help is coming, with £400 off energy bills for all, £650 for vulnerable households and £300 books for retirees.

Departing Conservative Prime Minister Boris Johnson has decided to leave this politically sensitive issue to the next head of government, whose name will be revealed on September 5.

The favorite to replace Boris Johnson, the very Thatcherite Liz Truss, had until then favored tax cuts more than direct aid which she regularly describes as “bandages”.

On Friday, she seemed to soften her position, in a column at the Daily Mail: “If elected leader of the Conservative Party and Prime Minister, I will take decisive action as I arrive in Downing Street on immediate aid, but I will also tackle the root of the problem.”