Martin Lewis warns of 'damaging' energy price cap rise
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The recent surge in energy prices is tantamount to a “national crisis”, according to energy companies. Good Energy, EDF and trade body Energy UK have all warned the Government that intervention is needed to stop an unprecedented rise in prices for UK households, many of whom are already struggling with current price hikes.
Nigel Pocklington, chief executive of London-listed Good Energy, said: “This is a national crisis.
“Wholesale gas and power prices have increased to unprecedented levels over the last three weeks, creating an extremely difficult operating environment for every business in the industry.”
Emma Pinchbeck, chief executive of Energy UK, said: “Other Treasuries in Europe have already responded to the crisis. But in the UK, the energy sector is still asking if the chancellor knows that energy bills going up by over 50 percent in the new year is a problem for ordinary people, businesses, and the economy.”
It comes after UK and European natural gas prices hit an all-time record high on Tuesday, with fears of a winter supply squeeze.
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UK wholesale gas prices hit a fresh record of 450p per therm, but have since subsided to 417p.
Some 25 gas suppliers have collapsed since early August in the UK alone, as wholesale gas prices soar and the price cap leaves companies unable to pass costs onto customers.
Now, the energy price cap is estimated to rise by a staggering 56 percent, pushing those on standard tariffs into the highest ever energy bills paid in the UK.
The bleak estimate comes from investment bank Investec, which has forecasted Britain’s energy price cap will rise to £1,995-a-year per household from April.
Nathan Piper, Investec’s head of oil and gas research, said: “We believe this is not just a price spike.
“There is a high likelihood of both prolonged and even higher gas prices through winter with an impact that stretches out over the next two years.”
The energy price cap has buoyed in recent years but is now set to become higher than ever.
The first energy price cap in September 2018 set an initial price of £1,136.
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The cap didn’t actually come into force until January 1, 2019, by which time the rate had been increased by a pound to £1,137.
Since then, it has bounced from small increases as little as £17, to larger increases of more than £100.
In February 2021, the cap level was increased by nine percent to £1,138, which came into effect from April 2021.
Now, the price has jumped to £1,277 – an increase of £139, the biggest jump since the cap was first set.
Experts predicted the upcoming cap will be pushed to upward of £1,900 a year – something that will not only hammer billpayers, but will likely have political ramifications.
A government spokesperson said the energy price cap was “the best safety net available to protect consumers from excessive price hikes”.
In September Boris Johnson described the gas price rise as “temporary” as global economies re-open from the pandemic.
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