UK energy price cap increases by 80%

The energy price cap will rise by 80% from October in the UK, which will further stoke inflation amid the crisis in the cost of living and put pressure on the government to act.

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This ceiling will increase from 1,971 pounds per year per average household to 3,549 pounds, Ofgem, the British energy regulator, announced on Friday because of the surge in world gas prices, particularly since the war in Ukraine.

“Modest” benefit for energy suppliers

“The rise reflects the continued rise in global wholesale gas prices, which kicked off with the lockdowns after the Covid pandemic, and were pushed to record highs as Russia slowly cut gas supplies to Europe“, argues Ofgem.

This threshold being calculated according to the average of wholesale gas prices over the previous months, experts expect it to be raised to more than 4,000 pounds in January and up to 6,000 pounds in the spring according to projections. the most pessimistic, which should fuel inflation already at more than 10% per year in the United Kingdom. “We are aware of the massive impact this price cap hike will have on households across Britain and the tough decisions consumers will have to make.commented Jonathan Brearley, Chief Executive of Ofgem. Ofgem clarifies that the cap provides for a “modest“benefit for energy suppliers on energy sales to households but that”unlike energy producers most distributors currently do not make a profit“.

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The Minister of Economy and Finance Nadhim Zahawi also acknowledged that “energy price cap announcements will cause stress and anxiety for many people but help is coming with £400 off energy bills for all, £650 for vulnerable households and £300 for pensioners“. “While (Russian President Vladimir) Putin is driving up energy prices in revenge for our support for Ukraine’s courageous fight for freedom, I am working tirelessly to develop new aid“, he assured, a few days before the announcement of the name of the successor to Boris Johnson in Downing Street.

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“Everyone is going to have a hard time»

Diane Skidmore, a 72-year-old pensioner who lives in social housing in south London on £600 (just over £700) a month, has seen her monthly bill drop from £25 to £45 in just over a year . She has just received a letter from her energy supplier asking her to plan for the next flow rates of 70 pounds. “Everyone is going to have a hard time“, she told AFP, saying her intention to use sweaters and blankets to minimize her energy consumption. However, she says she is worried about her neighbors whose electricity meter works on pre-payments: “they always find themselves in debt, and suddenly they do not pay their rent otherwise the electricity and the gas are cut“.

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Departing Conservative Prime Minister Boris Johnson has decided to leave this politically sensitive issue to the next head of government, whose name will be revealed on September 5. The favorite to replace Boris Johnson, the very Thatcherite Liz Truss, had until then favored tax cuts more than direct aid, which she regularly describes as “bandages“. On Friday, she seemed to soften her position, in a column at the Daily Mail: “if elected leader of the Tory party and Prime Minister I will take decisive action arriving in Downing Street on immediate aid but I will also tackle the root of the problem“.