The limit, which sets the maximum amount a utility can charge an average customer in the UK per year, has risen sharply by 54 per cent from £ 1277 to £ 1971.
This means an increase of £ 693 per year for the average customer.
In the worst news, regulator chief executive Jonathan Brirley told the House, Communities’ Energy, Energy and Industrial Strategy Committee that he expects the limit to rise again in October, bringing the limit to “around £ 2,800”.
In response to rising wholesale gas prices worldwide caused by increased demand and declining imports to Europe, a survey conducted on April 1, 2022, potentially pitted 22 million households against it for failing to meet their obligations.
The government-backed loan will cost around £ 5 billion to £ 6 billion, well below the £ 20 billion required by the energy sector, which has been highly critical of the ads.
Dale Vince, head of Ecotricity, called the measures “too little, too late”.
Responding in the House of Commons, the shadow chancellor of Labor Rachel Reeves also called Mr Sunak’s plans “a scheme of buying now, pay later, which burdens costs for tomorrow”.
Now the chancellor is ready to announce billions of pounds of further aid to people suffering from before expressed reluctanceonly to have his hand forced to deepen the crisis.
How much are electricity bills growing?
As of April 1, household accounts, which now use the standard variable rate, rose sharply by 54 per cent to £ 1971.
For approximately 4 million customers using the prepayment counter, there was an increase of £ 708 from £ 1,309 to £ 2017.
The announced new limit was calculated by Ofgem using a formula based on market prices and expected costs for suppliers.
As Mr Bryrley noted, in October it could rise sharply again.
What if I don’t use the standard variable rate?
People who go shopping and switch from standard variable rates could previously find offers hundreds of pounds cheaper than limiting energy prices.
Now all these deals have been canceled as the cost of energy supplies has risen.
Upon expiration of forward transactions, customers will be transferred to a standard variable rate at the price cap level.
The opportunity to go shopping is still available, but other offers will be more expensive, so customers are advised not to go.
What alternative measures have been proposed?
Unexpected tax from energy companies
The Labor Party is pushing the government to introduce one-time tax on oil and gas producers in the North Sea, who are among those who have benefited from big price increases this year.
Labor estimates the tax could raise £ 1.2 billion to the Treasury, which could be used to help people struggling with rising living costs, although that figure is only a small fraction of the extra spending the British will suffer this year.
The Chancellor reacted coldly to the idea, but, according to The Timesis now seeking to introduce a much broader tax on energy generators, including wind farm operators who have benefited from high prices.
Reduction of VAT
Energy UKtrade body for suppliers, previously called for a reduction in VAT on household accounts from 5 percent to zero.
Businesses pay 20 percent VAT on their electricity bills, and the government offers a 5 percent rate for firms that use limited amounts of electricity. Businesses are not protected by energy price restrictions.
But in last year’s October budget, Sunak resisted calls to cut energy taxes. Whitehall officials said at the time that the cuts would be ill-targeted, helping people who can afford to pay as well as those who will struggle.
Suppliers have also been asked to deduct fees that finance investments in renewable energy and improve energy efficiency. Investments will be paid for by general taxation.
They argued that it would be more progressive because those with higher incomes would make proportionally greater contributions. The levy is a tax on basic necessities that accounts for a significant portion of the amount paid by low-income households.
Meanwhile, E.On CEO Michael Lewis called for a “polluter pays” approach that would include raising the carbon tax to make up for money lost from account fees.
According to suppliers, the waiver of green fees and a reduction in VAT to zero could reduce bills by an average of 250-300 pounds.
Spread the cost
Energy UK has also proposed an industry-wide funding scheme to allow suppliers to distribute the cost of gas price spikes and supplier failures over several years.
Currently, the price cap mechanism means that all these costs will hit people’s bills next year.
Under the plan, lenders will allocate funds to cover the immediate initial costs of purchasing energy, with the money paying off over a longer period. The government will not guarantee loans, but will monitor the scheme to ensure it is not abused.
E. He also called for a “more radical” approach and suggested that the government use public funds to reduce bills in the short term.
“As an example, this could mean that the government is crediting part or all of the cost growth to its balance sheet, allowing these sudden price spikes to pay off later and reducing the immediate burden on consumers,” Mr Lewis said.
Dan Alchin, Deputy Director of Retail Energy UK, noted that governments in other countries have provided direct support.
For example, in Ireland households have promised 100 euros (84 pounds) from their first electricity bill in 2022, and in Italy the government has provided loans to suppliers.
“Nothing should be off the table now. We need the UK government to work with industry and find a way through this to help customers, ”said Mr Alczyn.
“They did not react as quickly as the finance ministries of other countries.”
Why are electricity bills rising so much?
Gas imports to Europe were below in connection with the recovery of the world economywhich caused increased demand in Asia.
Prolonged cold spells last winter and spring have resulted in less than usual amounts of gas remaining in storage across Europe.
The UK imports about half of its gas and is more dependent on goods for home heating than many European countries, which predominantly use electric heating systems.
Constantly low imports and the need to replenish gas storage facilities next winter have sparked demand for gas and led to further increases in gas prices.
Russia also accused of restricting gas supplies to Europe in order to exert political pressure on the EU.
Before his invasion of Ukraine On February 24, the Kremlin expected the EU to approve the opening of Nord Stream 2, its new Baltic Sea pipeline to Germany, although has since been blocked as punishment for aggression against a neighboring state.
Countries that were previously dependent on Russian energy imports have meanwhile been forced to look for alternative sources because Vladimir Putin turns out to be the chairman of the state of the outcasts.
Meanwhile, wholesale electricity prices have also pushed up gas prices and rising carbon prices.
Next, consumers will have to cover the costs associated with failed suppliers, some of which have failed to insure against volatile gas prices by buying enough energy in advance.
Electricity bills UK: How can the government help reduce growing gas and electricity bills?
Source link Electricity bills UK: How can the government help reduce growing gas and electricity bills?