Centrica’s Chief Executive, Chris O’Shea, has warned that energy bills are projected to remain high in the foreseeable future, placing added pressure on households that are already financially burdened.
O’Shea highlighted that despite energy prices reverting to levels observed prior to Russia’s invasion of Ukraine, they continue to be approximately two and a half times the historical average, primarily due to supply and demand dynamics. He further stated that energy prices had more than doubled even before Russia’s incursion into Ukraine.
From tomorrow, a reduction in the energy price cap will result in an average household having to pay an annual total of £2,074 for gas and electricity. However, this figure is still approximately £800 higher than it was a couple of years ago.
The Centrica CEO also cautioned against losing focus on potential external disruptions that could destabilize the market. Despite last winter’s stable prices and current stability, unforeseen disturbances like the recent skirmish between the Wagner group and the Russian military led to a 20% spike in energy prices. Furthermore, any potential increase in Chinese economic activity, leading to higher demand for Liquified Natural Gas (LNG), could cause European gas prices to surge, bringing more volatility.
In preparation for potential external shocks this winter, Centrica announced an expansion of its Rough facility’s capacity, enabling storage of up to six days’ worth of the UK’s average gas consumption. However, even with this measure, the UK still trails countries like Germany and France in terms of gas storage, holding an average of 12 days of gas in reserve, or 7.5 peak winter days, compared to 89 for Germany and 103 for France.
