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UK homes are facing fresh energy pain as prices hit 2,400 this year.




Millions of UK households are at risk of even more serious increases in electricity and gas prices next winter, with recent projections suggesting that the cap on energy prices will nearly double from October to £2,400 a year.

Calculations by EnAppSys, an energy consulting firm for the Financial Times, highlight the possibility that the country’s upcoming cost of living crisis will be prolonged as wholesale gas prices continue to trade at historically high levels.

The price cap, introduced in 2019 to protect the bills of about 15 million households who do not opt ​​in to fixed-price deals, is already set to rise more than 50%, from an average of £1,277 to £2,000 in April. usage.

Energy market regulator Ofgem sets a cap twice a year and applies the following changes in October after the end of April: Using the latest market prices, EnAppSys estimates that the limit will reach between £2,300 and £2,400 later this year unless governments and regulators step in to ease pressure on consumers.

The cost of gas contracts for delivery in late 2022 has increased significantly over the past two months, suggesting that energy prices will remain high for next year.

Declining gas supplies from Russia to Western Europe contributed to an initial surge in energy prices last summer, and pressures worsened in January.

Earlier this week, the head of the International Energy Agency accused Moscow of restricting gas supplies to Europe to use as leverage in the stalemate between NATO and Moscow over Ukraine. The market also responded to expectations that approval of the Nord Stream 2 pipeline to Germany would be further delayed, which Russia said was a condition for increasing European sales.

“EnAppSys is right, it’s not just a short-term issue,” said Philippe Commaret, Managing Director of Customers at EDF Energy, the UK’s fourth largest energy supplier. “Immediate support for our customers is still important for the steep uptrend we expect this winter and April, but the need for change does not stop there.”

Economists have warned that a cost-of-living crisis is imminent, as energy rate hikes from April coincide with national insurance and income tax hikes, rising inflation, which is the highest in a decade.

Ministers are considering relief measures, including a 5% VAT cut on energy bills, and government-backed loans to suppliers to lower customer rates and provide more help to vulnerable households. A so-called ‘green’ electricity rate cut, which provides subsidies for renewable energy projects, is also being considered.

Offgem plans to set the price upper limit for April on February 7th.

The EnAppSys analysis aggregates estimates from some energy suppliers that we have personally shared with the FT. A senior industry source said the cap could reach £2,600 next winter based on current forward energy prices.

Phil Hewitt, director of EnAppSys, warned that starting in October, there is still six months left in the wholesale pricing period used to calculate the price cap, during which the price could fall.

But he added that even if wholesale gas prices stabilize or decline, “it will remain above historical levels.”

The charity Age UK warned on Thursday that rising energy costs could trigger a “national emergency” for older people, saying many are already putting their health at risk by distributing heating bills.

Peter Smith of National Energy Action, a fuel poverty charitable organization, said the EnAppSys analysis could be “without proportionate and ambitious interventions. [by government] The misery of a cold home could become the norm for years to come.”

Dale Vince, founder of green energy supplier Ecotricity, called for a public investigation into the source of the energy price crisis on Friday.

“We must better protect ourselves from future shocks by properly examining the roots of this crisis, learning from our mistakes and rebuilding our energy markets,” he said.




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