Consumers face up to 40% rise in energy bills as gas price soars

Consumers could be hit by energy price rises of up to 40 per cent this year as power companies struggle to maintain profitability in the face of a trebling in wholesale gas prices, according to a piece just published on Times Online.

Leading market analysts said yesterday that an increase of that magnitude would drive average UK energy bills from £1,048 at present to £1,467 within seven months.

John Hall, an adviser on energy issues to industrial and corporate clients representing 15 per cent of the UK commercial gas and electricity market, said that Britain’s six major energy suppliers would need to raise prices by between 30 and 40 per cent this year to maintain margins.

Wholesale gas prices, which are linked to global oil prices, have increased nearly threefold in a year from 36.35p per therm in June last year to 94.54p yesterday. They briefly touched record highs of about 105p per therm earlier this month. Crude oil prices have also touched a record of nearly $140 a barrel this week.

Mr Hall said: “Unless there is a dramatic fall in oil prices, that is the scale of increase we are talking about to ensure that energy companies keep their margins.”

Moreover, National Grid expects gas output from the North Sea to fall 11 per cent this winter, significantly more than expected. More gas will need to be shipped to the UK from overseas as liquefied natural gas. That will put the UK in direct competition with Japan and South Korea, which are entirely dependent on LNG imports and pay top global prices.