U.K. Energy Bills Set to Rise 54% In April – The New York Times

The price many British households pay for their heat and electricity is set to rise by 54 percent in April, the government’s energy regulator, Ofgem, said Thursday. The big jump, caused mainly by a surge of global natural gas prices, is expected to exacerbate concerns over inflation and the cost of living in Britain.

The regulator said that for customers paying by direct debit from their bank account, annual charges would increase by 693 pounds ($940), to £1,971. The big rise will affect about 22 million customers who currently buy energy under a price cap set by the regulator.

Ofgem said natural gas prices, which hit record levels in December and remain elevated, had driven the increase. The regulator evaluates the market twice a year and allows energy providers to pass on costs such as increases in the price of gas, a major source of electric power generation, to consumers.

“We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet,” said Jonathan Brearley, Ofgem’s chief executive, in a statement.

Rising energy prices have become a major political issue in many countries, especially in Europe, with governments scrambling to find ways to ease the pain and avoid blowback from voters. The rising prices are also a threat to the effort to reduce carbon emissions, with some lawmakers calling for scrapping so-called green tariffs, extra charges added to bills in Britain and elsewhere to help pay for wind and solar power and other clean energy.

The high prices for natural gas have also led to a shake-up among utilities. According to Ofgem, 29 companies with 4.3 million customers have either gone bankrupt or otherwise left the market over the last year. Many of these companies were relatively small, and the wipeout of the sector has led to criticism that Ofgem has been lax in its financial requirements for energy providers. Consumers will be charged for some of the costs incurred by companies in taking on the customers of failed rivals.

According to Ofgem, generation costs like the purchase of gas will make up more than half of new energy bills, while green tariffs will come to about 8 percent.

On Thursday, immediately after the regulator’s announcement, the British government said it would allocate £9.1 billion to help consumers with their bills. Among the measures are a £200 discount customers will receive on their bills beginning in October. The sums would be recovered over the next five years when, the government apparently expects, costs are lower.

To critics, these measures fell short. Martin Young, an analyst at Investec, an investment bank, said that natural gas futures indicate that bills might need to surge again to around £2,300 in October, negating the government aid.

Greenpeace UK, the environmental group, said the government supports were “devastatingly scant for the poorest households, and aren’t sufficiently targeted to those who need them the most.”

Greenpeace called for new taxes on the profits oil companies are making from booming prices to finance additional relief for consumers.