UK energy bills for most vulnerable to hit £500 a month in January

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Gas and electrical energy bills for the most vulnerable households in Britain are predicted to soar to a mean of £500 a month in January, stoking the price of residing disaster and rising the strain on the federal government to act to save hundreds of thousands of households from energy poverty.

The warning from consultancy BFY Group got here because it forecast that the UK’s energy worth cap may rise to a mean of £3,840 in January following the most recent surge in fuel costs after Russia made additional cuts in fuel provides to Europe.

Gemma Berwick at BFY mentioned all households would wish to brace for sharply larger bills and that extra authorities intervention was now important to assist the most vulnerable households who have a tendency to be among the many 4mn households in Britain who use prepayment meters.

Unlike most prospects paying their bills by direct debit, which spreads the month-to-month price over 12 months, these utilizing prepayment meters have to pay for fuel and electrical energy as they use it at a barely costlier tariff, making it extra painful in the winter months when consumption is far larger.

“It’s down to the government to do something as these figures are shocking, we’re going to see vast swaths of households fall into energy poverty,” Berwick mentioned.

“It’s the prepayment households that are a real concern for me. While many households can spread the higher winter bills over the course of the year, prepayment families — often among the most vulnerable — are looking at bills of at least £434 in December and more than £500 in January.”

The energy worth cap has already elevated sharply this yr for prospects paying by direct debit to £1,971 from £1,277 as fuel costs have soared. For households on prepayment meters it has risen to £2,017 from £1,309.

Ofgem, the regulator, mentioned in May that it was anticipating the value cap to soar once more in October to round £2,800, after which the value cap will probably be reviewed each three months.

Rishi Sunak introduced a £15bn bundle of assist for households on the identical day Ofgem warned the October cap would rise whereas he was nonetheless chancellor.

In his battle with overseas secretary Liz Truss to develop into Conservative chief and the subsequent UK prime minister, Sunak vowed to lower VAT from energy bills if he received, whereas Truss has mentioned she’s going to take away inexperienced levies. Both proposals would lower lower than £200 from the typical annual family energy invoice.

Jess Ralston on the Energy and Climate Intelligence Unit mentioned the strain was rising on the federal government to develop the monetary assist bundle.

“We may well get through the winter without major incident but the gas bill at the end will probably be extortionate,” Ralston mentioned, including that the ultimate determine may nonetheless rise if wholesale costs in Europe continued to go larger.

Wholesale fuel costs are roughly 10 occasions the traditional degree over the previous decade and have doubled since June, when Russia lower capability on the Nord Stream 1 pipeline to Germany to simply 40 per cent.

Russia decreased provides additional on Wednesday to simply 20 per cent of capability. Germany has accused Russia of “waging an economic war” in opposition to Europe in retaliation for sanctions imposed following its invasion of Ukraine.

Berwick at BFY Group mentioned Ofgem may ultimately face strain to change how the value cap — which is for a typical family however will be larger or decrease relying on consumption patterns and the dimensions of a residence — is calculated. But she mentioned there was little likelihood of that occuring earlier than the tip of the yr.

“At this point in time [Ofgem] don’t have much choice as all of the energy suppliers will have likely been hedging their customer requirements based on the cap methodology,” Berwick mentioned.



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