The Cause of Household Energy Cost Rises
By Anne Lewis-Schneider
Not only have the rises of gas and electricity been rapid, but that of transport fuels has also risen sharply over the last four years. It is these increases of gas at 21%, petroleum products at 29% and electricity at 25% that have resulted in the UK consumer having to deal with 14% in price rises over this period of time. The average UK household now has to spend 26% of their disposable income on essential services which is an increase of 8% from a decade ago.
Ten years ago Britain imported only 2% of its gas requirements and this has risen to almost half of the gas requirements in 2013. In the first half of this year Britain has hit an all-time high of 1 trillion cubic feet, and estimates put the figure of gas imports at around 75% by 2018. Most of the gas comes to the UK via pipelines in the Netherlands, Norway and Belgium. In the meantime UK households have seen an increase on household fuel bills of £295 per annum.
The increases are largely due to wholesale costs but are also being impacted by the increase of green energy projects to eliminate carbon emissions in line with the EU agreement. Britain needs to increase its output of energy from within its borders as a matter of urgency; investments are sorely needed to build a better infrastructure of internal fuel supplies. This begs the question of the viability of shale gas produced in the UK from fracking, which opens up a whole new debate once more. Subsidies are a short term solution and a solution needs to be forthcoming.
Reserves in storage have dropped to a 15 day supply which could drop even further, and with coal generating plants being closed down before newer, more efficient ones are built is putting a squeeze on fuel supply. As Britain is spending more than 33% of its income to keep the lights on and the home warm, one wonders where it will end.
Npower has pledged not to increase prices until 2015 as long as wholesale prices remain stable, and there is no further increase in network prices. Another concern is levies introduced by the Government, which are currently being analysed and which contribute to the increase of household dual fuel bills. Hopefully, Government will have some cost cutting news on the Autumn Statement due in early December.
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