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2022-08-26 12:05:00

BRITISH COLD WINTER

BRITISH COLD WINTER

BLOOMBERG - Aug 26, 2022 - UK households will pay almost triple the price to heat their homes this winter compared with a year ago, a jarring increase for millions of people already struggling to afford everyday essentials.

Industry regulator Ofgem raised its cap on domestic energy bills to a record £3,549 ($4,189) beginning Oct. 1. That amount is expected to go even higher in January as the UK competes with other nations for limited gas supplies.

“Come October, low-income households will simply not turn on their heating,” said Peter Smith, director of policy and advocacy for the National Energy Action charity. “An increase of this much cannot be budgeted for by households with no wiggle room.”

The higher cap, which was in line with analyst estimates, escalates the economic pressures on Britons paying increasingly more for everything from food to furniture. UK inflation hit a 40-year high last month, and Citigroup Inc. said it could surge past 18% in January.

The government announced a £15 billion package of support in May, including £400 credits to all households and more for the poorest, but calls for further help remain unanswered during the Conservative Party’s ongoing leadership election.

“I know the energy price cap announcement this morning will cause stress and anxiety for many people,” Chancellor of the Exchequer Nadhim Zahawi said. “While Putin is driving up energy prices in revenge for our support of Ukraine’s brave struggle for freedom, I am working flat-out to develop options for further support.”

Some energy suppliers are calling for a £100 billion fund to help stabilize prices and a rapid effort to insulate more homes, but a government spokesperson has said no major policy decisions will be taken until a new prime minister is installed Sept. 5.

“It’s going to be horrendous,” said Bill Bullen, chief executive officer of Utilita Energy Ltd., which supplies 810,000 homes in the UK. “If any government doesn’t address this problem, they won’t be a government for very long,” he said on Bloomberg Radio.

The new cap -- a 178% increase on last winter’s level and 80% up from April -- regulates how much suppliers can charge households per unit of energy and applies to about 24 million customers on variable tariffs.

Annual bills for a normal household could reach £5,439 in January after the next adjustment and as high as £7,272 in April, according to consultants Auxilione. However, the cap -- which is based on volatile market prices -- is hard to predict until closer to the adjustment times.

“It’s clear the new prime minister will need to act further to tackle the impact of the price rises that are coming in October and next year,” Jonathan Brearley, CEO of Ofgem, said in a statement. “The response will need to match the scale of the crisis we have before us.”

Last winter’s cap was £1,277, but that was before Europe became hostage to the worst energy supply crunch in decades following Russia’s invasion of Ukraine. The continent is dependent on gas from Russia, and Moscow is curbing deliveries in apparent retaliation for European Union sanctions.

Ofgem’s announcement will “force many to make unthinkable choices this winter,” Labour Party Shadow Chancellor Rachel Reeves said in a statement. She pointed to Labour’s £29 billion plan to freeze bills this winter, funded in part by expanding a windfall tax on oil and gas companies.

Wholesale energy prices are the largest component of the cap, and they’ve soared to a level more than 10 times higher than their seasonal average for the past five years.

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Earlier:

BRITISH COLD WINTER
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BRITAIN'S ENERGY PROTECTION £100 BLN
UK was facing a “catastrophic winter”, telling the BBC that half of all households could fall into fuel poverty without intervention.
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EUROPEAN GAS PRICES GROW AGAIN
Russia’s Gazprom will halt flows on its key Nord Stream gas pipeline for three days of repairs on Aug. 31, again raising concerns it won’t return after the work.
BRITISH COLD WINTER
2022, August, 23, 10:45:00
EUROPE WITHOUT RUSSIAN GAS
Russian gas company Gazprom has announced it will halt gas supplies to Europe via the Nord Stream 1 pipeline from 31 August to 2 September 2022, quoting maintenance issues for the pipeline’s only remaining compressor.
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2022, August, 22, 13:30:00
EUROPEAN GAS PRICES UP ANEW
Benchmark futures rose as much as 16%, also driving up electricity prices to fresh records. The key Nord Stream pipeline will stop for three days of maintenance on Aug. 31, again raising concerns that the link won’t return to service as planned after the works.
BRITISH COLD WINTER
2022, August, 12, 08:30:00
BRITAIN'S HARD WINTER
Under the government’s latest “reasonable worst-case scenario,” Britain could face an electricity capacity shortfall totaling about a sixth of peak demand, even after emergency coal plants have been fired up, according to people familiar with the government’s planning.
BRITISH COLD WINTER
2022, July, 8, 14:25:00
BRITAIN'S ENERGY CRISIS
The UK's gas storage capacity is tiny when compared with most of Europe. The UK has just 0.9 Bcm of gas storage relative to around 80 Bcm of annual consumption, compared with Europe which has roughly 105 Bcm of gas storage, equal to 22% of annual utilization, according to industry body Offshore Energy UK.
BRITISH COLD WINTER
2022, May, 25, 11:10:00
BRITAIN'S ENERGY SHOCK
The energy price cap is likely to soar to a record £2,800 ($3,499) in October, Ofgem Chief Executive Officer Jonathan Brearley told a panel of lawmakers on Tuesday.
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Tags: BRITAIN, GAS, ENERGY, PRICE