Birmingham mum discusses her huge energy bill
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Households in the UK are currently facing the worst effects of a global fossil fuel energy crisis which has led to the price of wholesale gas skyrocketing in the past year. With household energy bills set to reach nearly £3,000 by this October, the Government is scrambling to find ways to ease the suffering of millions of families facing fuel poverty. In a recent interview, Mr Johnson hinted at issues a major overhaul of the nation’s energy market in a bid to ease the hit of surging prices of gas.
Speaking with BBC 4, he noted that much of Britain’s electricity is generated by natural gas, as the price that consumers pay is tied a marginal price.
As part of his sweeping reforms to the UK’s energy markets, the Prime Minister noted that changing that system could lower prices.
He said: “People are being charged for their electricity prices on the basis of the top marginal gas price, and that is frankly ludicrous.
“We need to get rid of that system and we need to reform our energy markets as they have done in other European countries.
“That is one of the ways, by reforming the market, by changing the way things work, you can get prices down.”
The Government is scrambling to lower energy bills, which is part of what’s triggering record inflation and creating a cost of living crisis.
The UK currently has the most deregulated powers markets anywhere in Europe, which has led to many smaller energy companies collapsing of being unable to cope with record energy prices, stranding millions of households with no energy supplier.
Another move that the UK is considering is severing the link between the prices of gas and electricity for consumers, which could see bills go down for millions of households.
In what could be the largest reform to the UK’s energy market in decades, ministers are drawing up plans to end the system through which the wholesale cost of gas essentially determines the price of electricity for consumers.
While the cost of wholesale gas has reached record levels around the world, the cost of renewable energy generation has been largely left unaffected by this energy crisis.
Despite the fact the UK generates about a quarter of its electricity from renewable sources, bills have skyrocketed, with many blaming this link between the price of gas and the price of electricity.
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With the UK expanding both nuclear energy and offshore wind production over the coming years, the Government believes that the pricing system no longer serves its purpose.
Ofgem has also warned that around 12 million households in the UK will face fuel poverty as a result of the price cap increase in October.
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