Cruel April fuel
Energy bills ‘to rise another 20%’ in spring ...despite wholesale prices falling by 70%
ENERGY bills will surge by 20 per cent from April – despite wholesale gas prices crashing by 70 per cent and giving the Government a predicted saving of £11billion.
Struggling households will see average bills rise from £2500 to £3000 a year in the spring after the Tories decided to cut subsidy levels under the Energy Price Guarantee.
A £400 payment for all households will also end.
Meanwhile, think-tank the Resolution Foundation estimates the dip in wholesale gas prices since August’s peak means the cost of the EPG for the year from April has tumbled from £12.8billion to £1.5billion.
This is due to not having to subsidise bills when they fall below the £3000 threshold and the saving will be partly offset by lower than expected income from windfall taxes on North Sea producers.
Yet households look like having to wait until later this year for bills to fall.
The Resolution Foundation estimates they will still average £2400 over the whole of the 12 months from April – a 20 per cent hike on the average £2000 a year over the past year.
Before the pandemic, average bills were £1200 a year. Resolution Foundation economist Emily Fry said: “Falling wholesale gas prices have been the big economic good news story of the year. This will bring real benefits to families, even if it might not feel like it for some time to come.”
She added that the savings on the EPG will give Chancellor Jeremy Hunt a windfall in next month’s Budget.
A surge in energy bills in the wake of Russia’s invasion of Ukraine is one of the reasons inflation has hit a 40-year high.
The drop in wholesale prices is expected to take some of the heat out of living costs as the year goes on.
Fry added: “The cost-of-living crisis is far from over but falling gas prices mean it’s looking less bleak than a few months ago.”
Last week, we told how oil and gas giant Shell had announced “obscene” record profits of £32.2billion, fuelled by Russia’s war in Ukraine.
The company cashed in on higher prices paid by consumers while £21billion was paid to shareholders last year.
Rival BP is expected to double its annual profits to around £23billion when it announces it results today.
British Gas has been criticised for entering customers’ homes and installing prepayment meters after they struggled to pay soaring bills.