Energy prices soar as UK battles cost of living crisis
Soaring energy prices are hitting UK households and energy suppliers in a market that has realized that Britain’s cost of living crisis will not be resolved anytime soon and is s will get even worse next winter.
Soaring gas and electricity prices since the fall of 2021, pushed even higher by the Russian invasion of Ukraine earlier this year, have made it difficult to pay energy bills for millions of Britons as utilities rack up losses and billions of pounds in unpaid bills.
In April, the situation worsened when the so-called energy price cap was raised by more than 50%, double the number fuel-stressed households in the UK overnight.
The cost of living crisis “is going to get really awful” in October this year, when the half-yearly adjusted price cap is expected to rise further, Keith Anderson, managing director of one of the biggest suppliers, ScottishPower, Told a parliamentary committee last month.
The UK has something called an energy price cap, which protects households from excessively high bills by capping the price that suppliers can pass on to them, but additionally burdens suppliers of energy.
But as the price cap has been raised significantly – due to high energy prices in the six months before energy market regulator Ofgem’s decision to increase in February – households have increasingly struggling to pay their energy bills.
“There’s no immediate quick fix,” said Josh Buckland, a partner at Flint Global and a former government energy adviser. Bloomberg.
Energy suppliers are calling for a change in government policy as they begin to see the impact of unpaid bills as households grapple with high energy, food and fuel prices.
According to last survey from the Office for National Statistics.
Due to the cost of living crisis, Britons are now spending less on non-essentials, using less gas or electricity at home and reducing non-essential journeys in a vehicle, the statistics office has found.
“There is a huge worry and a huge anxiety from people on the phone about what they are going to do, the worry they are facing and the real worry. A lot of people are facing this problem for the first time, ScottishPower’s Anderson told the UK House of Commons Business, Energy and Industrial Strategy Committee in April, three weeks after the energy price cap was raised by 54%.
“Around 10% of our customers are currently in arrears,” Chris O’Shea, CEO of British Gas owner Centrica, told the same committee.
Related: Six Years Behind and 250% Over Budget: Georgia’s Newest Nuclear Power Plant
“We’re seeing a slight uptick now, but it’s going to get worse – much worse – without any further intervention, in October,” O’Shea added.
ScottishPower’s Anderson echoed O’Shea’s position, saying that “Come October, it’s going to get really awful. It is now at a stage where I honestly believe the size and magnitude of this is beyond what I can handle. It’s beyond what I think this industry can handle. There needs to be a massive and significant change in government policy and approach in this regard.
Inflation in the UK is expected to rise to around 10% in the fourth quarter of 2022, mainly due to the expected further rise in the energy price cap in October, according to the Bank of England mentioned earlier this month, warning of a “very sharp slowdown” in activity, although central bank officials refrained from calling it a “recession”.
Analysts and energy providers agree that this price shock is not just a short-term problem with a quick fix.
“We are gradually realizing that the cost of living crisis is not going to fade, that inflation is going to push towards 10%, that interest rates are rising, and that of all the bills that citizens are facing, energy bills are the ones that hold out”, Sir Dieter Helm, professor of economic policy at the University of Oxford, wrote earlier this month.
By Tsvetana Paraskova for Oilprice.com
More reading on Oilprice.com: