As Russia tightens its grip on Europe’s gas supplies, the UK is set to experience record-breaking energy prices this winter. This will only add to Britain’s current cost-of-living crisis.
According to BFY Group Ltd’s analysis, average power bills will rise to £500 ($603.30 per consumer) in January. This is more than three times the level of last year. However, it will still be significantly higher than energy costs in recent decades.
Gemma Berwick, a senior consultant at BFY, stated that “large swathes” of British citizens won’t be able to pay their bills this winter. “Fuel poverty will hit families of two working parents on average.”
Russia is reducing flows to Germany’s Nord Stream pipeline. This is Russia’s main gas connection to the European Union. It cited maintenance problems with the turbines. This has caused energy prices to soar, as countries across the region race to stockpile winter fuel and limit economic damage from the crisis.
According to BFY, the cut in gas flow through Nord Stream will cause the UK to increase its energy price cap (the maximum charges utilities can charge customers) to £3,420 for the fourth quarter. It stated that this amount would rise to £3,850 by the beginning of 2023. This is even more than the recent analysis by Cornwall Insight Ltd. released before the latest rise in gas prices.
Although Britain claims it has stopped using Russian gas, its supply and market are still tied to Norway and the continent. Although the UK has many gas terminals, it lacks adequate storage facilities. It exports fuel to continental Europe during the summer. It can also import fuel during the winter, which is energy-intensive.
Whoever is Britain’s next prime Minister will face a test in the form of an increase in costs. Although candidates have been fighting over who will manage the economy and inflation better, they are essentially powerless in taming international commodity markets.
Already, the energy industry has stated that current measures to assist households this winter are likely to be inadequate. This week, a parliamentary committee determined that the government must provide more relief for consumers in the next months.
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