Energy Crisis: Energy Poverty Warning As Price Cap Rises In Times Of ‘Chaos’ For The Economy

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Energy Crisis: Energy Poverty Warning As Price Cap Rises In Times Of ‘Chaos’ For The Economy


A 12% increase in the energy price cap went into effect amid warnings, further increases are inevitable in the coming months as wholesale costs rise in a period of ‘chaos’ for the economy at large.

Labor, who have claimed a ‘winter of discontent’ is looming, accused the government of appeasement in the face of ‘the fuel crisis, the energy cost crisis and the supply chain crisis’ – factors all accused of adding to the costs of consumers and businesses.

The change in price caps will affect more than 15 million homes stuck on so-called default tariffs – tariff plans for the supply of gas and electricity that are automatically billed to those who fail to change or select offers at a fixed rate.

The cap rises from £ 139 to £ 1,277, while prepaid customers will see an increase of £ 153 to £ 1,309.

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Your energy bills could go up – here’s what to do

Ofgem, the industry regulator tasked with making the cap fair for suppliers and customers alike, said during its review of the price cap in August that the hike reflected a 50% increase in wholesale energy costs in the past six months.

However, industry experts have warned that another jump would likely be imposed from April – when the next review is expected to take effect – as wholesale gas costs for delivery next month did not. that accelerate.

Figures from industry analysis firm ICIS this week showed a year-over-year increase of over 600%.

Contracts for delivery in March are currently at slightly lower levels than in November.

The skyrocketing sums prompted Resolution Foundation senior economist Jonny Marshall to say “another big hike” in the price cap was coming.

“There is little respite in sight from the rising energy bills,” he told Sky News.

The unprecedented and mind-boggling rate of increases as the weather changes has been blamed for the deluge of small energy company failures – 10 of them just last month – because their economic models leave them at the mercy of short-term price peaks.

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Ofgem: Soaring prices could be here to stay

The reasons for the record price levels are many and complex, but can be largely attributed to global supply issues as economies rebound after COVID-19[feminine[feminine perturbation.

A cold end to last winter in Europe left gas stocks lower than usual and competition for raw energy more widely intensified globally with China, the world’s second-largest economy, suffer from power cuts.

In the United Kingdom, a lack of wind power generation and even a fire in kent last month have been blamed as contributing factors.

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The fire at the power interconnector at Sellindge in Kent last month will keep it out of service for six months

Soaring electricity prices have drawn attention to the impact on households amid warnings that higher energy bills will combine with the loss of government assistance programs to leave millions of families facing difficulties.

Data from the End Fuel Poverty Coalition campaign group suggests that raising the price cap alone would push the number of fuel-poor people in England to around 4.1 million.

“Hot spot” of fuel poverty - 10 local communities most affected by fuel poverty.  Source: Coalition Against Energy Poverty Index
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The 10 communities most affected by fuel poverty. Source: End Fuel Poverty Coalition Index
“Hot spot” of fuel poverty - 10 local communities least affected by fuel poverty.  Source: End Fuel Poverty Coalition Index
Image:
The 10 local communities least affected by fuel poverty. Source: End Fuel Poverty Coalition Index

His research identified Barking & Dagenham, Stoke-on-Trent, Newham, Shropshire, Herefordshire and King’s Lynn and West Norfolk as “cold spots” of energy poverty.

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Building resilience in the UK energy market

A Citizens Advice report released on Thursday indicated that the poorest households could lose £ 37.40 per week as energy company failures coincided with the end of the pandemic’s £ 20 universal credit hike and leave program.

Consumer groups say the best way for energy consumers to protect themselves against rising gas and electricity bills is to review their rates and shop around, but given the magnitude of the increases in gas and electricity bills. wholesale prices, some admit that price caps may be the best defense in the short term. term because suppliers are forced to pay record amounts in the current market.

The ability to pay for the cost of a break or a night out is also decreasing, as a temporary reduction in VAT to help hotel and tourism businesses recover from the pandemic has been partially removed -om 5% to 12, 5%.

All this as the economy battles a record labor shortage in the aftermath of Brexit with the shortage of 100,000 heavy truck drivers increasing supply chain costs and contributing to the current delivery crisis of fuel which has seen many courtyards dry up by panicked buyers.

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The fuel crisis “is under control again”, according to the government

The Bank of England expects the rate of inflation to rise relative to its current level of 3.2% beyond 4% by the end of the year – Governor Andrew Bailey admitting this week that the economy was facing “tough jobs”.

Critics of the government accused ministers of sleepwalking in the price crisis and demanded more intervention.

Labor said the new £ 500million Household Support Fund for England, revealed Thursday, was a “temporary and inadequate adhesive plaster” as families grapple with challenges on many fronts.

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Ministers have been warned they have only 10 days to sort out supply chain issues or risk ruining Christmas for millions.

Shadow Business Secretary Ed Miliband said, “We desperately need leadership to contain this chaos.

“It was the Conservatives’ complacency that led to the fuel crisis, energy cost crisis and supply chain crisis our country is experiencing, with ministers ignoring corporate warnings and failing to plan to advance. “

He added: “Ministers blame the public and fail to recognize the scale of the problem.

“We need to make Brexit work, and that starts with addressing the huge truck driver shortage that is causing chaos in our supply chains. “

A spokesperson for the Ministry of Business, Energy and Industrial Strategy said: “The energy price cap protects millions of customers from rising global gas prices. Even with the increase planned today, the cap still saves households up to £ 100 per year and is in addition to broader support for vulnerable, elderly and low-income households.

‘Earlier this week we announced a new £ 500million Household Support Fund that will help those most in need meet the cost of basic necessities over the coming months – and families will continue. to benefit from winter fuel payments, cold weather payments and the warm house discount, which is increased to £ 150 and extended to cover an additional 750,000 households. ”

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