Energy bills for millions of homes are set to jump by a third as the price of natural gas hit a new record low on Wednesday, with experts predicting that the worst is yet to come.
Experts now estimate that the energy price cap, which sets the maximum that suppliers can charge for gas and electricity, will need to be raised to a further £400 when it is next reviewed by regulator Offgame in April.
The unprecedented jump of nearly a third would come after a 12 per cent increase from earlier this month and warnings that 3.5 million people would be unable to heat their homes this winter.
Those who are currently on cheaper fixed rate tariffs will also see a sharp rise in their bills when those deals expire.
The alarming rise in gas prices will spark fears of catastrophic cost cuts to millions of homes, which spark comparisons with the winter of the 1970s and the period of post-war austerity.
It came as Boris Johnson addressed a Tory party convention on the same day hailing his ambition to create a high-wage, high-skilled economy, with millions of the poorest households adding up to £1 billion in their annual income after the government stepped in. saw a decrease of 1,040. Universal Credit deduction of £20 per week.
Labor has argued that, as well as throwing many more households into poverty, a £6bn benefit cut would also halt the UK’s faltering economic recovery by taking money out of the hands of those most likely to spend it. Huh.
The charities warned that rising energy prices would mean more people falling into fuel poverty in the coming months. Families are being advised to stick to their current supplier as there are currently no cheap deals available for switchers.
The cheapest fixed-rate tariff now available on price comparison sites is about £500 above the energy price cap level of £1,277, which is the maximum rate companies can charge on their standard variable tariff.
This means that when the energy price cap is reviewed, households face a bigger increase when their existing deals expire.
Energy consultant Cornwall Insight predicted the cap would rise by about a third to £1,660 based on wholesale energy prices. Pantheon Macroeconomics predicted a similar 33 percent growth.
In the interim, more energy firms are expected to close because they will be unable to absorb record bulk gas prices that cannot be passed on completely to customers.
Ultimately, any costs resulting from suppliers’ failure are borne by consumers through a levy that is recovered through energy bills. Industry analysts say the cost could exceed £3 billion.
Credit rating agency Moody’s sounded the alarm about UK retail energy suppliers in a report on Wednesday.
Moody’s Senior Vice President Joanna Fick said: “The cost of energy supplier failures – which could well exceed £1bn and be many in a scenario with a high exit from the market – and high energy bills drive up affordability. Will give concerns and credit negative political interference risk.”
Clients of failed firms are advised not to switch as they will face higher prices if they do so. Offgame will switch all customers to a new company under a so-called supplier of last resort (SOLR) process. Credit balances are secured and must be honored by the new supplier but are likely to increase when customers switch bills.
On Thursday, the price of natural gas for next day delivery in the UK crossed 300p per therm for the first time before falling back to 260p.
Energy is one of a range of essential commodities that are rising in prices, with businesses in sectors of the economy saying they expect prices to rise further.
Global disruptions in supply and labor shortages – both exacerbated by the government’s handling of Brexit – mean companies are paying significantly more for materials, parts, workers and shipping. Trade groups say the cost should be passed on to consumers soon.
Gas prices fell from their peak Wednesday afternoon after Vladimir Putin said Russia took steps to help stabilize global energy markets.
The Kremlin’s previous statements on gas supplies have fueled criticism from European politicians, who believe Russia can increase production if it wants, but is instead choosing to restrict supplies as a way of increasing its power.
Russia wants the European Union to approve the opening of the full Nord Stream 2 pipeline, which will allow more gas to be pumped into Europe from gas fields in Siberia. Russia’s state-backed Gazprom is a major source of income for the Kremlin.
The UK is more sensitive than other countries to rising gas prices because it relies more heavily on natural gas to heat homes.
Britain also has less storage capacity after the government allowed the closure of a plant that stores three-quarters of the country’s natural gas.
Europe is grappling with a natural gas shortage due to the cold, which left stocks short before a cool summer with less air than usual, meaning it was less able to rely on renewable energy.
The problem is compounded by less than expected gas supplies from Russia and high demand for liquefied natural gas in Asia.
Credit: www.independent.co.uk /