UK energy prices rise 10% due to extreme weather and geopolitics

The British energy regulator Ofgem raised the price cap for household energy bills on Friday by 10%, from October 1, to a level of 2,250.64 pounds per year. This increase was blamed on extreme weather conditions and conflicts like the war in Ukraine.

Jonathan Brearley, CEO of Ofgem, said: "The price increase we announced today is largely due to our dependence on a volatile gas market in the world that is easily affected by international events or aggressive states."

Brearley stated that the increase in price cap will be difficult for many families.

The 10% increase for a dual-fuel household on Friday was slightly higher than analysts' expectations. Cornwall Insight, an energy consultancy, said that the cap would rise by 9% because wholesale prices for gas and electricity have risen in the last few months.

The consultancy stated that "while prices have stabilized somewhat in comparison to the last two years, the markets has not recovered fully from the energy crises and the impact of Russia’s invasion of Ukraine."

Ed Miliband, the Energy Secretary of the Labour Party, said that the increase was due to what he called a "failed" energy policy the Labour Party had inherited from Conservative Party.

He claimed that the current policy leaves the country at the "merciless mercy" of international gas markets ruled by dictators.

Cornwall Insight stated that measures should be taken to protect vulnerable people from rising energy costs. In the long run, a shift to sustainable energy generated at home is needed to reduce Britain’s vulnerability to shocks abroad.

"While we do not expect to see a return of the extreme prices in recent years, it is unlikely that bills will ever return to normal," said Craig Lowrey from Cornwall Insight.

In 2019, Britain implemented a cap on energy prices for consumers. In January 2023, the average price of energy reached a high of 4,279 pound as a result of Russia's invasion in Ukraine.

Simon Francis, coordinator for the End Fuel Poverty Coalition said that energy bills were still 65% higher than they were before the crisis.

(source: Reuters)