Crisis warning as UK energy costs set to soar

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The Independent Online

Electricity and gas futures prices have hit record levels for this winter and are set to land Britain with Europe's biggest energy bill.

Electricity and gas futures prices have hit record levels for this winter and are set to land Britain with Europe's biggest energy bill.

Household electricity bills could rise by almost a fifth over the next 12 months while industrial users face a massive 60 per cent increase, according to the energy information consultancy EIC.

Industrial companies such as the chemicals manufacturer Ineos Chlor, which uses 1 per cent of the electricity generated in the UK, and industry representatives such as the Energy Intensive Users Group will meet officials from the Department of Trade and Industry on Wednesday to warn of the looming energy crisis.

Without government intervention, companies that use a lot of energy will be forced to cut production and lay off staff this winter, they will say.

Last year the UK became a net importer of gas, and future gas prices for the first quarter of next year hit a record 70p per therm last week - twice as high as last year. This has forced up the cost of electricity generation for gas-fired power stations, and traders fear there could be a shortage if this winter is particularly cold.

Andy Waring, the energy purchasing manager at Ineos Chlor, said that the massive energy bills mean that British business is struggling to compete with European firms. "You can't pass on these energy costs to our customers - they will just buy their goods from French and German companies instead. If British firms continue to have the highest energy bills in the European Union, British industry's competitiveness and employment will suffer."

Mr Waring wants the DTI and the energy regulator, Ofgem, to speed up construction of new gas pipelines to ease the supply shortage.

Matthew Williamson, an analyst at EIC, said that as well as high gas prices, carbon emissions trading, introduced in January, is adding another 10 per cent to electricity prices.

Ofgem released its report on expected winter demand for energy last week. It admitted that gas supplies are lower than at this time last year.

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