The chief executive of renewable energy giant Octopus Energy has called for a permanent price cap on energy bills to curb the impact of soaring gas prices. On Friday, regulator Ofgem increased the price cap by £139 from October 1, pushing up the cost of energy bills for 11million households on variable standard tariffs this winter. Ofgem said the record 12.2 per cent rise on annual bills, from £1,138 to £1,277, is due to a 50 per cent leap in wholesale energy costs over the first half of the year. Octopus boss Greg Jackson said the higher bills would be difficult for many households – but that without the price cap, energy bills could rise by hundreds of pounds. He called for the cap – introduced in 2019 by then-Prime Minister Theresa May to end ‘rip-off’ energy prices – to be extended permanently beyond its current end in 2023. It has so far cut customers’ energy bills by £1billion per year. Jackson said: ‘Keeping the price cap in place permanently is something we would love to see from the Government. I cannot see any reason why you’d ever take it away. ‘If it weren’t for the cap, the prices from the former Big Six suppliers would be between £1,360 and £1,500 each year, based on how they have priced in the past. Energy consultancy Wood Mackenzie said the UK’s demand for imported gas will rise 1.5 times by 2030 as its homegrown production falls by 71 per cent over the same period. The UK no longer has any long-range gas storage and it has almost fully phased out coal generation. Murray Douglas, research director at Wood Mackenzie, said this means high energy prices are here to stay over the next decade. He added: ‘The global gas market will tighten considerably to 2025, with only a temporary reprieve next summer, and the UK will be more exposed to gas price volatility, particularly in winters. The winters through to 2025/26 will be the most challenging.’ Jackson said the UK can now produce electricity from wind at around 5p per kilowatt hour, compared with generating from gas which now costs 9p per kWh. But around 90 per cent of the energy used by dual-fuel customers in the UK still comes directly or indirectly from gas.
This is Money 8th Aug 2021 read more »