Energy bills could rise even further for UK customers as the government reportedly plans to introduce new gas tariffs.
According to The Times, a new strategy will be released next month ahead of the Cop26 climate change conference in Glasgow obliging the government to cut the price of electricity and put a tax on gas bills to help finance low-carbon heating.
On Monday the Prime Minister said the UK aims to produce “clean electricity” by 2035 in order to meet the country’s goal of net zero carbon emissions; and earlier this week Economy Secretary Kwasi Kwarteng insisted that by decarbonising UK electricity supplies, the government would ensure households are less vulnerable to fluctuations in fossil fuel markets.
The government will publish a series of consultations before proceeding with the plan, which is expected to start in 2023 and could increase gas bills by £ 170 a year, the newspaper reported.
The strategy will reportedly include measures to boost sales of heat pumps which, according to the GMB union, cost an average of £ 8,750 before VAT – nearly a third (31%) of the average household’s total annual income.
A spokesman for the Department of Business, Energy and Industrial Strategy told the Times, “We will be introducing our upcoming heating and buildings strategy shortly. No decisions were made. “
Rising energy costs have led industry leaders to warn the government that their factories could cease production or close permanently.
Minister of State in the Department of Business, Energy and Industrial Strategy Kwasi Kwarteng (Aaron Chown / PA)
Andrew Large, Director General of the Confederation of Paper Industries, and Gareth Stace of UK Steel attended a Friday afternoon meeting with the Secretary of Commerce and other representatives from the energy-intensive industries to discuss the gas wholesale crisis.
In a subsequent interview with BBC Radio 4’s PM program, Mr. Large claimed that it was “very clear” in all sectors that there were “serious” risks that factories could shut down all activities due to excessive gas prices.
He said: “When we spoke to the Foreign Minister this afternoon, it was very, very clear in all sectors that there are serious risks of an effective factory shutdown due to excessive gas costs, and in these circumstances there will be gradual effects on supply chains, right up to for manufacturing, consumer retail and other products. So the risks are very, very real. “
Speaking to Channel 4 News, Mr. Stace insisted that in the worst case scenario, the steel mills would shut down for good.
He explained: “The nightmare scenario would be that we are producing less steel in the UK, that we see that all the steel that we are using in the UK and that is increasing is being covered by imports and once you take a steel mill away you don’t bring it really back.
“That’s it forever. When it’s done, it’s done. “
In a letter to the Times editor, former British ambassador to Russia Sir Tony Brenton appeared to suggest that Britain should have signed a long-term gas supply contract with Moscow 15 years ago.
Sir Tony said he “watched Gordon Brown complain to (Vladimir) Putin about rising gas prices; the answer was that our problem was self-inflicted ”.
“Other countries have escaped the vicissitudes of the market by entering into long-term contracts; Britain does not, ”he added.
Analysts have predicted UK customers’ energy bills could rise 30% over the next year.
Research agency Cornwall Insight has claimed gas prices remain volatile and the potential collapse of even more suppliers could push the energy price cap to around £ 1,660 in the summer.
The forecast is about 30% above the record price cap of £ 1,277 for the winter of 2021-22 that began in early October.