A group representing Britain’s energy suppliers and generators today predicted bills next year will rise by between 45% and 50%, and called today for financial help from the Johnson administration.
On BBC radio this morning, Energy UK chief executive Emma Pinchbeck called for tax reliefs and market interventions by chancellor Rishi Sunak’s Treasury, in line with moves by the French and German governments.
Only a fifth of UK retailers’ bills to customers are directly within the suppliers’ control, Pinchbeck told ‘Today’. Policy costs such as VAT, green levies including the Renewables Obligation make up the rest, and should be reviewed.
“It is looking pretty serious for the spring. This is a system-wide issue now”, Pinchbeck said. In September Premier Johnson described the impending crisis as a ‘temporary problem’.
Urgent action was needed from the government to offset the 500% rise faced by generators in gas prices since September, the Energy UK boss said this morning.
The last two weeks have seen repeated tightening in markets, not least due to Germany’s new SPD-Green coalition telling Russia that its new Nord Stream 2 pipeline does not meet EU guidelines. Though new German leader Olaf Scholz is thought to be in favour, his economy minister Robert Habeck has warned that Russian aggression towards Ukraine will incur sanctions against the pipeline.
The effect has been to push UK wholesale electricity prices for delivery in summer 2022 to above £240 /MWh, according to analysts Catalyst Commercial, as seen below. At the start of this year, it was £60 /MWh.
Day ahead prices for late December delivery fluctuate between £300 /MWh and £400 /MWh.
EnergyUK’s Pinchbeck said these were “levels we frankly have not really faced in the industry”.
“Many other governments across Europe have reduced taxes or VAT on bills” she went on. “In the UK that would save around £90 per customer”.
“There are also policy costs on energy bills that government was consulting on removing, on electricity bills primarily, they could bring that forward. That saves about £190 per customer.”
Good Energy’s chief executive Nigel Pocklington described the situation as a “national crisis”.
“Wholesale gas and power prices have increased to unprecedented levels over the last three weeks, creating an extremely difficult operating environment for every business in the industry,” he told the Financial Times.
EDF, the UK’s fourth biggest energy supplier, said the situation was “critical” and the government must “act now to support energy customers”. Philippe Commaret, the managing director for customers at EDF Energy, said that by next October the UK’s energy price cap “could easily exceed £2,000”.