LONDON: British energy bills are set to increase by 80 percent this autumn, costing more than £3,500 ($4,197) a year, according to the UK’s energy regulator (Ofgem), which called it a “crisis” that demanded urgent government intervention.
More extreme than other European countries but representative of skyrocketing energy prices across the continent, the dramatic jump is expected to take a serious toll on millions of households across Britain, Ofgem CEO Jonathan Brearley said.
He went on to predict another increase in January as wholesale gas prices hit record levels, a cycle exacerbated by Russia dramatically cutting supplies to Europe that is piling pressure on political leaders to act before more citizens slip into so-called fuel poverty.
Surging fuel costs are threatening not only to push large numbers of Britons into a situation where they cannot afford to spend money on anything but basics, but also to cause the collapse of small businesses up and down the country.
Despite inflation reaching a 40-year high and the Bank of England warning of a lengthy recession, there is concern that Britain’s political leadership is being sidetracked by the competition to replace Boris Johnson as prime minister.
Ofgem’s Brearley said the UK’s next leader – either Liz Truss or Rishi Sunak – needed to act as soon as they were in office on September 5.
“The response will need to match the scale of the crisis we have before us,” he said. An annual average bill of £1,277 ($1,510) last year is expected to go up to £3,549 ($4,197) this year, with leading forecaster Cornwall Insight predicting prices would likely jump again in 2023.
It expects bills to be just below £6,000 ($7,094) through next year, meaning households could be paying nearly 500 pounds a month for gas and electricity, a higher sum than rent or mortgage for many.
While almost 30 energy retailers have gone out of business in the UK, and Ofgem said most domestic suppliers were not making a profit, the market’s volatility has also seen the potential for higher earnings among big energy companies.
Big energy firms can make large profits by trading energy stocks, and when things are rocky on the market, their traders can take advantage: BP recently reported profits of £6.9 billion for the three months to June 2022, the second highest in the firm’s history, and triple the amount it reported for the same period last year. With anger growing over privatized utilities companies profiting while consumers foot the bill for the global energy crisis, many Britons are turning to direct action to push the government to respond adequately.
British grassroots group “Don’t Pay UK” is calling for people to boycott energy bills from October 1, while the trade union-backed “Enough is Enough” campaign kicked off a series of rallies and actions in mid-August calling for pay rises, rent caps, cheaper energy and food, and taxes on the rich.
British finance minister Nadhim Zahawi said more help was on its way for consumers and businesses struggling with the soaring cost of energy.
He added that support options for both households, particularly the most vulnerable, as well as businesses were being working on.
“We know we need to do more because actually the most vulnerable households have no cushion,” Zahawi told reporters. “More help is on its way … I am doing the work to make sure that will be in place throughout next year.”
As annual inflation in Europe hits a record 8.9 percent – about 4 percentage points of that due to more expensive energy – other major economies on the contient have responded to the increase in gas prices with more obvious direct government intervention.
In early August, Italy introduced a new aid package worth around €17 billion to help protect firms and families, which comes on top of some €35 billion allocated this year to fight the cost of living crisis. Meanwhile, Spain is taxing those energy companies profiting from the increase in energy prices, using the money raised to help its citizens pay the bills. France has forced the state-owned energy provider EDF to limit electricity wholesale price rises to 4 per cent for a year, a move expected to cost €8.4 billion ($8.41bn). Germany, which is struggling to wean itself off Russian gas, has pledged to lower the value-added tax on natural gas from 19 per cent to 7 per cent until 2024, and has also approved two cost-of-living relief packages for a total of €30 billion ($30bn).
–The Daily Mail-CGTN
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