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British consumers warned of huge energy price rises

Datetime: 2021-10-11 11:09:56

A closed Esso gas station is pictured in south London, Britain, October 5, 2021. [Photo/Agencies]

 

British consumers have been warned they could face significantly bigger energy bills next year if current high wholesale fuel prices do not come down.

The country's energy supply market has thinned out recently, as in September alone, nine companies were forced out of business by high wholesale prices that they are prevented from passing on directly to consumers by the price cap system, put in place by energy industry regulator, Ofgem.

This figure, for the summer and winter, is set based on underlying costs to suppliers, to ensure customers do not end up with unmanageable bills.

The winter 2021/22 cap, set at the start of October, is 1,277 pounds ($1,735), which is already the highest figure on record, but there are warnings it could rise by up to 400 pounds in the spring.

Ofgem has vowed that consumers will not "pay more than is absolutely necessary this winter" but if gas prices remain high, the cap would have to be adjusted accordingly.

"With wholesale gas and electricity prices continuing to reach new records, successive supplier exits during September 2021 and a new level for the default tariff cap, the Great British energy market remains on edge for fresh volatility and further consolidation," Craig Lowrey, senior consultant at energy sector management consultants Cornwall Insight, told the BBC.

Speaking on the BBC Radio 4 Today program, Dale Vince, the founder of Ecotricity, one of the United Kingdom's smaller energy providers, accused the government of having a system that was "killing energy companies".

"It's illogical to hold prices at one end of the supply chain and not the other end, and the natural consequence is companies going out of business," said Vince. "The government currently have closed their eyes and ears to this and said they don't care, they're not going to help energy companies but that kind of misses the point because they're killing energy companies right now."

In addition to soaring gas prices, the nation's electricity supply network looks like it will be put to the test in the coming months.

In September, a vital electricity supply cable from France to the UK was put out of action by a major fire, with the Financial Times reporting that supply could be affected until March 2022.

Each year, the National Grid gives its winter outlook, assessing its capability to keep the country lit. As part of this, it calculates the electricity margin, which is its estimate of how much supply will be left in reserve at peak usage time, based on average consumption.

Last winter, the figure was 8.3 percent; this year, it had been forecast to be 7.3 percent, but the calculated figure is now 6.6 percent.

"The winter outlook confirms that we expect to have sufficient capacity and the tools needed to meet demand this winter," Fintan Slye, executive director of the National Grid Electricity System Operator, told Sky News.

"Margins are well within the reliability standard and therefore we are confident that there will be enough capacity available to keep Britain's lights on." By JULIAN SHEA in London | China Daily Global | Updated: 2021-10-08