Tue. Oct 19th, 2021

UK Business and Economy Updates

Many more households will be forced into ‘desperate’ measures, such as rationing their heating this winter, charities have warned as a global gas supply crunch, low wind output and strong demand have pushed energy prices in Europe ever higher.

According to consultant Cornwall Insight, power prices in the UK reached £ 540 per megawatt-hour on Monday, the highest level since 2008. The equivalent gas price reached a new high of £ 1.51 per term.

In recent months, energy prices in the United Kingdom and mainland Europe have reached a series of fresh peaks, driven by a combination of a global guest card, a setback in energy demand after easing coronavirus closure restrictions and some of the worst conditions for wind generation in the North Sea for more than two decades.

Gas supplies in Europe, which were already low after the long cold weather last winter, took longer to replenish after a fight supplies from russia. Rising demand from Asia for liquefied natural gas (LNG) has also pushed up prices even higher.

An adviser to the US State Department warned the weekend that Russia’s decision to limit supply and low gas supplies endangered lives this winter.

In the UK, gas production has been 28 per cent lower so far this year, as businesses have carried out maintenance which was delayed during the height of the pandemic.

Phil Hewitt, director of energy consultant EnAppSys, said high electricity prices on submarine cables through which Britain trades power with continental Europe were also a factor. Gas is still the largest source of electricity in Britain and is the fuel that heats the majority of homes in the UK.

“We suspect this is not the end of the high prices for this week,” Hewitt said.

Julien Hoarau, head of EnergyScan, the analytical utility of the French utility industry, Engie, said the generation of wind power in the UK during the first two weeks of September was almost 60 per cent year-on-year.

“Strong competition for gas supply combined with low renewable generation – for power markets like the UK, it’s a strong cocktail,” he said.

The rise in prices in recent months has sparked fears of a gloomy winter that could force households under financial pressure and energy-intensive industries ration consumption.

The British energy regulator Ofgem announced in August that prices for 15 million households, the accounts of which are determined by two energy price heads, by approx. at least 12 percent from October. Analysts said the sustained rise in wholesale prices could lead to a further significant rise in energy prices when revised early next year. Any increase will take effect next April

Cornwall Insight analyst Joe Camish said it was “conceivable that prices could rise by 10 per cent or more if wholesale prices continue to rise”.

Charities have warned that the rise in October coincides with the end of a temporary lifting of the main welfare benefit in the UK.

Ruth London of campaign group Fuel Poverty Action said higher bills for millions of households would be ‘devastating’, especially ‘if you get people who already count cents and who already ration their heating’.

In the UK, even 4 million households could not afford to heat their homes adequately, even before the latest energy price crisis. Some 10,000 deaths a year is related to life in a cold house, according to the charity National Energy Action.

The NEA said that households under financial stress tend to take ‘desperate’ measures, such as limiting their energy consumption to a few hours a day, or resorting to hot public spaces, such as libraries or cafes.

Lady Clare Moriarty, chief executive of Citizens Advice, said the ‘perfect storm’ of rising energy bills, the planned cut to universal credit next month and a possible increase in redundancies after the end of the UK government’s ‘scheme’ in the millions red “.

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