UK energy crisis: Bills may soar 30% in 2022, as Ofgem warns more firms will collapse as prices spiral
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Energy bills could rise further in the UK next year, analysts have warned, after research showed volatile gas prices and the potential collapse of more suppliers could push the price cap up to about £1,660 come summer.
The forecast is around 30 per cent higher than the record £1,277 figure set for winter 2021-22, which began at the start of October, according to research agency Cornwall Insight.
It comes as the chair of energy regulator Ofgem warned of “significant” price rises and more company failures in light of soaring gas prices.
Speaking at the Energy UK conference on Thursday, at what he said was an “unprecedented” time for the energy market, Jonathan Brearley said customers will face “an extremely difficult time” as rising costs “are ultimately passed through to bills”.
He also predicted more company failures, telling attendees the industry had already seen twelve companies fail and that “given the continued volatility of the market it is likely that more suppliers will exit the market”.
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Good afternoon, and welcome to The Independent’s rolling energy crisis coverage. Stay tuned as we bring you the latest updates as Ofgem warns of “significant” price rises and more company failures in light of soaring gas prices.
Energy bills set to rise by 30% in 2022, analysts warns
Research agency Cornwall Insight has predicted further volatile gas prices and the potential collapse of even more suppliers could push the energy price cap to about £1,660 in summer.
The forecast is approximately 30 per cent higher than the record £1,277 price cap set for winter 2021-22, which commenced at the start of October.
Craig Lowrey, senior consultant at the firm, said: “With wholesale gas and electricity prices continuing to reach new records, successive supplier exits during September 2021 and a new level for the default tariff cap [£1,277 for a typical dual fuel direct debit customer] for winter 2021-22, the GB energy market remains on edge for fresh volatility and further consolidation.”
Energy regulator Ofgem acknowledged in a statement to the BBC that it was a “worrying time for many people”:
“The energy price cap covers around 15 million households and will ensure that consumers don’t pay more than is absolutely necessary this winter.
“However if global gas prices remain high, then when we update the price cap unfortunately the level would increase.
“Any customer worried about paying their energy bill should contact their supplier to access the range of support available.”
Industry bosses call for ‘urgent action’ amid supply warnings
Industry leaders have called for “urgent action” after the National Grid said in a report on Thursday that the UK faces tighter electricity supplies this winter than it did last year because of rising demand and capacity constraints.
The operator stressed it expects gas and electricity supplies will meet the country’s needs but warned of a potential massive shock to bills.
In a separate report, the operator insisted there should be no disruption from gas flames going out despite the energy crunch.
Energy and business minister Kwasi Kwarteng, speaking at the Energy UK conference, said the government is confident supplies will meet demand this winter.
But he warned that record wholesale energy prices - which have seen nine suppliers go bust in September alone - “may well see [more] companies going out of the market”.
Energy price rises will continue and more firms will collapse – Ofgem
Energy regulator Ofgem has warned of “significant” price rises and more company failures in the light of soaring gas prices.
Speaking at the Energy UK conference on Thursday, chair of Ofgem Jonathan Brearley said that customers will face “an extremely difficult time” as rising costs “are ultimately passed through to bills”.
He also warned that the price cap will be likely to increase, saying that “it is designed to reflect fair costs and therefore will need to adjust over time to reflect the changes in fuel prices”.
Speaking at what he said was an “unprecedented” time for the energy market, Mr Brearley said that more company failures were to be expected, reports Holly Bancroft.
‘Significant’ price rises will continue and energy firms will collapse, Ofgem warns
Firms ‘increasingly’ passing on soaring costs to consumers – data
Let’s take a look at the bigger picture. A survey by the Office for National Statistics (ONS) showed nearly a third of companies have seen a higher-than-normal increase in costs, as the supply chain crisis continued to cause chaos across the economy.
While firms battle against rising costs of everything from energy to staff wages, they are resorting to increasing price tags to consumers to weather the inflation pressures.
The ONS survey showed that 10 per cent of businesses reported increasing the price of goods and services in early September - up from 8 per cent in mid-August and 4 per cent in late December. Figures showed that, of these, nearly a quarter - 23 per cent - were retailers across the wholesale and consumer-facing sectors and 25 per cent in the manufacturing industry.
It comes amid mounting signs of rampant inflation in the UK, including energy prices rocketing, the recent fuel shortage leading to surging costs on forecourts, and prices rising more generally in the economy.
In the retail sector, the likes of Next and Hotel Chocolat have recently said they are putting up prices in the face of cost pressures, with the ONS survey also showing that businesses are struggling to fill vacancies as staff shortages – adding to price woes.
When asked about all this at the Conservative Party conference this week, Boris Johnson claimed there was “no alternative” to inflation and suggested shortages were a sign Britain’s economy was “waking up” from Covid and Brexit.
Watch: Boris Johnson says there is 'no alternative' to inflation
Petrol crisis caused ‘single biggest buying spike since records began’
Sky News’ Ed Conway reports the following:
UK petrol station stock recover to 25%
Stock levels at Britain’s petrol stations recovered to an average of 25 per cent on Sunday, new figures show, though “significant regional variation” remains ranging from just 16 per cent on average in the southeast of England to 35 per cent in Scotland.
Average stock levels sank to a low of 15 per cent on 25 September, the day after panic buying began, the data from the Department for Business, Energy and Industrial Strategy (BEIS) shows.
The figures show how full petrol station storage tanks are at the end of each day. Tanks were typically around 33 per cent full before the crisis began. On 24 September, fuel sales were up 80 per cent compared with normal levels.
Sales remained “substantially above” average until the middle of the following week when they “began to trend back to normal levels”, BEIS added.
Despite the positive news, Gordon Balmer, executive director of the Petrol Retailers Association, said on Wednesday that 13 per cent of independent filling stations in London and the southeast still do not have fuel.
“This is leaving some motorists continuing to feel insecure about fuel availability at their local neighbourhood filling stations,” he warned.
Russia claims it can boost gas supplies to Europe
The Kremlin said today Russia has the potential to boost natural gas supplies to Europe where surging prices have ramped up pressure on consumers.
Dmitry Peskov, a Russian government spokesman, said existing gas transit routes allow for bolstering supplies before the new Nord Stream 2 pipeline, which is intended to bring Russian gas to Germany begins, operating.
“There is a potential,” Mr Peskov said during a conference call with journalists, which AP reported on. “It all depends on demand, contractual obligations and commercial agreements.”
Europe’s soaring gas prices dropped on Thursday, a day after Vladimir Putin suggested his country could sell more gas to European spot buyers via its domestic market in addition to through existing long-term contracts.
Russian deputy PM Alexander Novak said yesterday that getting Nord Stream 2 launched would quickly stabilise European energy markets, but critics were quick to say this was merely an attempt to force regulators to move quicker on certifying the pipeline.
Speaking during Wednesday’s government meeting on energy issues, Mr Putin said: “I would like to underline that the situation in the European energy markets is a bright example of the inadmissibility of hasty and politically motivated moves in any sphere, particularly in energy issues that determine stability of industries and welfare and life quality of millions of people.”
He also strongly rejected criticism from some European politicians who alleged that Russia‘s failure to boost supplies was fuelling price increases, saying Russia “has always been a reliable gas supplier to consumers around the world”.
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