- Ofgem, chief executive of the Gas and Electricity Market Office, has issued a stern warning to British parliamentarians about the energy crisis.
- 12 million households could be pushed into energy poverty.
- Inflation has reached a 40-year low.
Consumers in the UK will face another sharp rise in their electricity and gas tariffs shortly before winter, which will push up the prices of almost everything from food to petrol.
Energy prices are expected to peak at $ 3,499 in October, Ofgem’s chief executive Jonathan Braille told a group of parliamentarians on Tuesday. This will send about 12 million households into energy poverty.
The rise will increase pressure on Rishi Sunak, the treasurer and second-in-command of the treasury, to help consumers deal with the worst pressure on purchasing power since the 1950s. The burden of inflation, which is at its highest level in 40 years.
Ofgem’s CEO will write a letter to Mr Sunak warning of an increase of more than $ 1,000 in the annual bill of about 22 million households.
“Currently about 6.5 million households are living in fuel poverty, but that number will double after the increase in October,” he added. About a quarter of consumers are already in debt for their energy bills, according to price comparison website Uswitch.
The UK government is divided over the introduction of a windfall tax on the profits of electricity producers and oil and gas producers. Pressure has mounted on Prime Minister Boris Johnson to implement the tax, but several government ministers have openly opposed the move, saying it would encourage investment.
Mr Sunak is “instinctively anti-tax, but if he realizes that extraordinary times call for extraordinary action, it’s up to him,” Foreign Secretary for Trade and Energy Kwazi Quarteng told parliament on Tuesday. He said the government should focus on growing the economy to help reduce energy costs.
“The magnitude and depth of Britain’s cost of living crisis means that the government urgently needs to provide significant additional support,” said Johnny Marshall, a senior economist at the resolution’s think tank.
Summary of purchasing power
Britain is facing its second worst year in living standards.
Source: Bank of England
Note: Total resources available to households deducted from consumption expenditure inflation.
Suppliers are declining
More than two dozen energy suppliers have gone bankrupt since August. Most of these companies, which have only a few hundred customers, have allowed anyone to start an energy supply company as a result of deregulation, according to Bloomberg. Ultimately, it is the taxpayers who will bear the brunt of this, underlining the same source.
“There are important lessons to be learned from this crisis, and it is absolutely necessary to change the way we regulate the retail market,” said Ofgem’s CEO. “The price fluctuations we have seen in the gas market are a kind of phenomenon not seen since the oil crisis of the 1970s.”
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