The UK government believes it has until April to find a solution to ease the burden of surging natural gas and energy prices on utilities and households, although no immediate fixes have been adopted.
As a result of the energy crunch, households in the UK will face much higher electricity prices beginning in April, as the government prepares to raise the so-called cap on utility bills.
The UK’s energy regulator Ofgem is expected to announce the new price cap on energy prices in early February, but the effect on household bills will be felt as of April 1.
The UK government believes it has two more months after February to assess whether some consumers will need assistance or relief to blunt the impact of the surge in energy bills, a source with knowledge of the matter told Bloomberg.
Earlier this month, 20 Conservative Members of Parliament and peers called on the UK’s Prime Minister Boris Johnson in a letter to Sunday Telegraph to have the value added tax (VAT) and the environmental levies on energy bills removed.
Johnson, however, dismissed on Tuesday those calls, despite a pledge during the Brexit ‘Leave’ campaign that without the EU, the UK would be able to scrap the VAT on energy bills. Removing VAT on utility bills could result in assisting “a lot of people who perhaps don’t need the support,” he said.
While UK households face steep rises in energy bills, energy providers are going out of business by the dozens.
Two dozen power and gas suppliers in the UK had already exited the retail energy market as of the end of November, and more are likely to do so. Another 20 energy providers in the UK could go bust in what looks like a “massacre” in the coming months unless the government reviews the energy price cap, Keith Anderson, chief executive at one of the largest providers, ScottishPower, said in November.
The energy cap will be reviewed and raised as of April 1, but this will significantly increase the cost of living for Britons.
By Tsvetana Paraskova for Oilprice.com
