UK energy crisis ‘bigger than pandemic’

Earlier this year, the UK government tried to protect households from the 90% expected increase in electricity bills through tax cuts, electricity bill rebates and direct payments. But since then, natural gas and electricity prices have surged, as have projections for future growth.

Researchers at the Public Administration Institute said Tuesday the government would need to spend an additional £23bn ($27bn) to shield households from about 90% of expected electricity bill increases through April 2023. April 2024 would cost another £90bn.

This forecast is in line with the offer price of Scottish Power, one of the UK’s largest energy companies. He urged the UK government to protect millions of households by freezing their accounts for two years. report according to the Financial Times.

The average annual bill is currently £1,971 ($2,318) – up 54% this year – but is projected to top £3,500 ($4,117) when the latest price cap is set on Friday. three months of this year. Analysts at research firm Auxilione say the average family could pay up to £6,433 ($7,579) a year for natural gas and electricity next spring if the government doesn’t intervene.

Scottish Power says the UK government should cap electricity bills at £2,000 ($2,356) and allocate money to suppliers to cover much higher gas and electricity prices in wholesale markets.

The value of the £100bn subsidy will come from increased government borrowing financed by general taxation over the next decade or more, the Financial Times said, citing unnamed people familiar with the matter.

“It’s going to be really terrible for a lot of people,” said Keith Anderson, CEO of Scottish Power. STVScottish TV channel on Monday, citing price increases.

“This is more than a pandemic. This is a big national crisis,” he added.

The company did not immediately respond to CNN Business’s request for comment.

The UK government’s pandemic holiday scheme, which has been in place for 18 months, has cost almost £70bn ($82bn). In March 2020, when the outbreak of the coronavirus pandemic shut down businesses, the government agreed to subsidize workers’ wages to prevent mass layoffs.

The government has offered around £33 billion ($39 billion) to households this year to help pay for energy through tax cuts, energy bill rebates and direct payments. This is stated in a report published on Tuesday by the Institute of Government. The UK government says it is doing more.

“We know the pressure people are facing with rising costs, which is why we are constantly taking action to help households with £37bn of support in phases,” said a spokesman for the Department of Business, Energy and Industrial Strategy.

“We are providing a £400 rebate on electricity bills this winter and the eight million most vulnerable households will receive an additional £1,200 support. While no government can control global gas prices, more than 22 million households are protected by the price cap that continues. to shield households from even higher prices,” the spokesperson added.

But anxiety is spreading across the UK energy industry. On Tuesday, Philippe Commaret, chief executive of the French company EDF, a major player in the UK market, told the BBC that, without additional support, about half of British households could end up in fuel poverty from the beginning of next year, meaning they will have to spend more than 10% of their disposable income on energy.

Last week, NHS officials warned of a “humanitarian crisis”. Many people could get sick this winter as they “face a terrible choice between not eating to heat their homes and having to live in cold, damp and very unpleasant conditions,” they said.

Wholesale natural gas prices began rising last year as countries reopened after the pandemic, sparking a global surge in demand.
Russian invasion of Ukraine at the end of February and subsequent energy crisisonly pushed prices even higher. Western countries have banned imports of Russian coal and oil, and Europe is desperate to move away from Russian natural gas.

June was the first month on record in which the UK did not import fuel from Russia, traditionally one of its main suppliers, according to data released on Wednesday by the UK Office for National Statistics.

Sky-high prices have led to the bankruptcy of 29 small energy suppliers in the UK since last summer. Those that survived passed most of the costs on to their clients.

– Benjamin Brown contributed reporting.

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