Thread by @ELPinchbeck

Energy price cap rises 10%: £150 for the average household bill. a quick 🧵: bills have come down since the peak of the crisis but are higher than they were in 2021, and with the end of government support we can see households struggling - and that was before this new rise.

Energy debt held by suppliers, mostly from unpaid bills, stands at a record £3.2 billion - and high debt levels are an issue for everyone, as the regulator requires suppliers to manage this debt or recoup it from across all bill payers.

The reason that bills are going up is largely, as throughout the crisis, due to the rising price of gas in the wholesale markets. There is more uncertainty, with a similar mix of geopolitical uncertainty and funny economic conditions that drove prices up in the summer of 2021

We are exposed to high gas prices in the UK because we import a lot of it, particularly for heat, with 80% of households here with gas boilers. There is little we can do, even as an O&G producer, to impact prices. Bringing back Rough storage will help a bit to smooth spikes….

… but our best tool, to protect the economy and all our customers from these high prices, is to reduce demand for imported gas. This is where the new Government is right to focus on building more renewables and investing in insulation. It would be good to see Gov plans on heat.

The ONS estimates that investing in Net Zero, or essentially in electrification and other green tech, rather than dependence on imported gas, would save the UK economy £50bn in the event of another spike. And everyone expects prices to remain volatile going forward.

The barriers to building new technologies from nuclear, offshore wind to new rooftop solar or heat pumps are all a) planning reform b) grid connections c) barriers to investment (eg the fact that electricity prices are higher than gas, with policy costs on electricity)

It’s been good to see Government move quickly on the next auction round on renewables, on onshore wind and solar, and GB energy. There are decisions to be made on grid, and some proposed market reform (which will take time and has to balance investment and new system services)

Standing charges have also been going up. We need to make the transition costs & are distributed fairly, and we build efficiently: the new strategic plan for grid from the new system operator, and today’s consultation response from
Ofgem are starts at this.

We also need to engage with people about changing energy in our homes and businesses. We need better information, advice and support from trusted people, as we move to a more electrified life - we are working with consumer groups and others on this: I think it’s all hands on deck

But none of this helps with affordability this winter. Some of it will take years. In MISSION POSSIBLE, our paper for Government about what they could do FAST, to help sort energy for business, consumers, and the economy, we said they should take action quickly on support

(This is in addition to the money given by retailers through existing support schemes and voluntary commitments, and we will of course look to do even more ).energy-uk.org.uk/our-work/vulne…

We are suggesting THESE THREE THINGS:

1) Reduce the burden of policy costs on bills - Funding a portion of existing policy costs through general govt spending would result in immediate bill reductions for all households.

2) Rebalance the remaining costs on bills - a rebalancing levy that shifts a proportion of domestic policy costs remaining on electricity bills to gas could be a good option, with the aim of achieve a ratio of electricity to gas prices of around 3:1 to help reduce reliance on gas

3) Improve targeted support. Steps 1) and 2) will result in lower bills for the vast majority of households. Paying for energy will still be simply too unaffordable for too many people. The quickest, most pragmatic way to improve short-term support is by doubling WHD this winter

LASTLY, as always over the last few years, I urge anybody struggling with bills to contact their supplier. There is a range of help available for those struggling with their bills. Citizens Advice or other consumer charities can also help with advice and support.