Families could face energy bills misery until 2030: Gas and electricity prices are ‘unlikely to return to normal’ until next decade, experts warn

  • Energy bills are ‘unlikely to return to normal’ this decade, experts have warned
  • Average bill will rise from £2,500 to £3,000 in April as energy cap increases 
  • Analysts said the price would be as high as £4,174 if based on international costs

Energy bills misery is set to continue through 2023 amid warnings that the cost of heat and light will remain high for a decade.

Gas and electricity costs are unlikely to return to ‘normal’ until the 2030s, according to analysis from industry experts Cornwall Insight.

The average annual bill is set to rise from £2,500 to £3,000 in April, which means families and businesses will be paying more next winter.

Analysts said the price would be as high as £4,174 if the figure was linked to international wholesale prices and not limited by the Government’s energy price guarantee.

Analysts said the price would be as high as £4,174 if the figure was linked to international wholesale prices

The guarantee, which was introduced in October, will cost as much as £47billion over 18 months, energy analysis warned

Experts added that the total cost of the guarantee, which was introduced in October, is on course to cost as much as £47billion over 18 months.

Although this will be added to government borrowing, Cornwall Insight warned the cost will have to be paid back by taxpayers over the coming decades.

Analysts also said that surging bills can be directly linked to Vladimir’s Putin’s invasion of Ukraine and the UK’s decision to stop buying Russian gas and oil. 

This means Britain has become more reliant on imports of expensive gas from Norway and through shipments of Liquefied Natural Gas (LNG) from America, the Middle East and parts of Africa.

Dr Matthew Chadwick, lead research analyst at Cornwall Insight, said: ‘Gas prices in the UK are projected to continue to be impacted as the country’s heavy reliance on imported gas sees it vulnerable to global rises. 

 Britain has become more reliant on imports of expensive gas from Norway and through shipments of Liquefied Natural Gas (LNG) from America, the Middle East and parts of Africa

The Government’s energy price guarantee scheme, which protects households against the worst of the wholesale price increases, is due to lapse in the spring of 2024

These high prices… are unlikely to be a single winter problem, with prices forecast to be maintained in 2023-24 and unlikely to return to pre-2021 “normality” this decade.’

Highlighting factors such as the UK’s reliance on imports, he added: ‘There are risks of continued high gas prices and sustained elevated bills for consumers as we prepare for, and then move through, next winter.’ 

Any increase in the price of gas feeds through to electricity because it is used to fuel around 40 per of UK power stations.

Looking ahead, he said: ‘Our long-term forecasts indicate gas prices are likely to remain high up until the end of next winter, without some radical change in the buyer-seller relationship between Europe and Russia.

‘The plausible scenarios are that pipeline flows of Russian gas will be even further reduced on summer 2022 and we will also see gas prices remaining above pre-pandemic levels until at least 2030 as the market takes time to adjust to this change in supply and demand dynamics in Europe.’

Energy bills are due to surge again in April when increases in broadband, phone tariffs and council tax are also set to come into effect. 

The Government’s energy price guarantee scheme, which protects households against the worst of the wholesale price increases, is due to lapse in the spring of 2024.

There are reports only the poorest households will be protected after that date, leaving the majority facing yet another round of increases as they try to keep warm.

Dr Chadwick added: ‘Without some form of enduring action… these costs will eventually end up on the bills of the many struggling households and businesses.’

Source: Read Full Article