Gas prices at lowest for 12 months - yet bills set to climb. - Thanks to Ed Minimind.
UK households to face step energy price rises in October due to a government levy subsidising electricity and gas for the country’s poorest homes, according to new analysis.
Annual energy bills are expected to rise from £1,720 to £1,737 this autumn, with nearly 90% of the increase attributed to the expansion of the Warm Homes Discount. This scheme, funded by a levy on bills, aims to reduce winter energy bills for 2.7 million households receiving benefits by £150.
Cornwall Insights’ latest prediction marks a change from its previous forecast in July, which predicted a slight drop in bills due to easing Middle East tensions. Their predictions are based on the average combined gas and electricity bill for a typical dual-fuel home.
We are told repeatedly that our electricity price is linked to the Gas price. The price of gas is the lowest for 12 months and expected to fall further.
Craig Lowrey from Cornwall Insights acknowledged that wholesale energy costs had fallen as predicted, but the Warm Homes levy and other changes by regulator Ofgem had added new costs. He emphasised that while the added costs support those most in need, typical bills will still increase despite lower wholesale costs.
Lowrey clarified that the price cap reflects more than just the market price of energy.
The cost of energy has experienced a significant rise over the past five years. In 2020, the price cap was set at £1,042, but it sharply increased due to the energy crisis triggered by Russia’s invasion of Ukraine. By October 2023, the price cap reached £2,380 but has since declined, with no sign of returning to 2020 levels.
These increases have led to a surge in domestic energy bill debts and arrears, as reported by Ofgem figures. In early 2020, these debts amounted to £1.3 billion, but they have risen to around £4.2 billion in the present time.
Mr Lowrey warned that the latest figures indicate a significant drop in bills is unlikely in the near term. This highlights the broader uncertainty facing millions of households. He believes the real hope for lasting relief lies in the longer-term transition towards clean power and energy independence, which offers stability and lower costs. Green campaigners argue that high gas prices are the primary reason for elevated bills, but the UK price of natural gas is inflated by carbon taxes such as the Climate Change Levy and the Emissions Trading Scheme, which are controlled by the Treasury. Consequently, most of the responsibility for high bills lies with the Government. Consumers also face additional costs like grid charges, which have risen from £125 in 2020 to £165 today, primarily to fund upgrades to connect renewables, and Green levies add more charges. Richard Neudegg, of Uswitch.com, emphasised that while the predicted rise, though modest, suggests consumers should seek the best deals to prepare for winter. He noted that most households will consume more energy during colder months, so the October cap rates will determine the cost of heating homes as winter approaches.s as winter arrives.
Of course if we actually lowered the cost of energy we would need less subsidies to cover the additional costs. This is yet another example of the madness of the rush to go carbon zero and the cost on all of the UK.
If we were smart we would reduce the painful North Sea Windfall tax rate that is forcing produces to leave the sector and at the same time encourage Fracking to access our UK home grown gas reserves. – If we don’t our costs will continue to creep up, our balance of payments will continue to detoriate and we all become worse off.
