Gas and electricity prices are unlikely to return to normal until next decade, experts warn
Families could face energy bill woes until 2030: Gas and electricity prices not likely to return to normal until next decade, experts warn
- Energy bills are unlikely to return to normal this decade, experts warn
- Average bill will rise from £2,500 to £3,000 in April as energy cap rises
- Analysts said the price would be as high as £4,174 on an international cost basis
The energy bill woes will continue until 2023, amid warnings that the cost of heat and light will remain high for another decade.
According to an analysis by industry experts Cornwall Insight, gas and electricity costs will not return to ‘normal’ until the 2030s.
The average annual bill will rise from £2,500 to £3,000 in April, meaning families and businesses will pay more next winter.
Analysts said the price would be as high as £4,174 if the figure were linked to international wholesale prices and not constrained by the government’s energy price guarantee.
Analysts said the price would be as high as £4,174 if the figure were linked to international wholesale prices
The guarantee, introduced in October, will cost a whopping £47bn over 18 months, energy analysis warned
Experts added that the total cost of the guarantee, which was introduced in October, is on track to cost a whopping £47 billion over 18 months.
While this will be added to government borrowing, Cornwall Insight warned that the cost will have to be paid back by taxpayers for decades to come.
Analysts also said rising bills could be directly linked to Vladimir Putin’s invasion of Ukraine and the UK’s decision to stop buying Russian gas and oil.
This means that Britain has become more dependent on expensive gas imports from Norway and on liquefied natural gas (LNG) shipments from the Americas, the Middle East and parts of Africa.
Dr. Matthew Chadwick, lead research analyst at Cornwall Insight, said: ‘Gas prices in the UK are expected to continue to be impacted as the country’s heavy dependence on imported gas leaves it vulnerable to global increases.
Britain has become more dependent on expensive gas imports from Norway and on shipments of liquefied natural gas (LNG) from the Americas, the Middle East and parts of Africa
The government’s energy price guarantee scheme, which protects households from the worst increases in wholesale prices, expires in spring 2024
These high prices…are not likely to be any winter issues as prices are expected to be maintained through 2023-24 and unlikely to return to pre-2021 “normal” levels this decade.”
He highlighted factors such as the UK’s dependence on imports, adding: “There are risks of continued high gas prices and continued high consumer bills as we prepare for and then move through next winter.”
Any increase in the price of gas is funneled into electricity, as it is used to fuel around 40 per cent of the UK’s power stations.
Looking ahead, he said: “Our long-term projections indicate that gas prices are likely to remain high until the end of next winter, without any radical change in the buyer-seller relationship between Europe and Russia.
“The plausible scenarios are that pipeline flows of Russian gas will be further reduced in the summer of 2022 and we will also see gas prices remain above pre-pandemic levels until at least 2030 as the market needs time to settle.” adapt to this change in supply and demand. dynamism in Europe.’
Energy bills will rise again in April, when the increases in broadband, telephone rates and council tax also come into effect.
The government’s energy price guarantee scheme, which protects households against the worst wholesale price increases, will expire in the spring of 2024.
There are reports that only the poorest households will be protected after that date, leaving the majority facing another round of increases as they try to stay warm.
Dr. Chadwick added, “Without some lasting action… these costs will eventually end up on the bills of many struggling households and businesses.”