UK energy prices to rise 20% in the next four years, warns Octopus
The UK’s top energy bosses have warned that the country faces substantial energy price hikes unless the government intervenes.
The bosses of OVO Energy, Centria, Scottish Power, and others all responded to questions in parliament on Wednesday (15 October) about the rising cost of electricity and how it can be reduced.
The data shows the average annual energy bill for a typical household is now around £1,755 – almost £500 higher than in October 2021.
The group noted that the UK’s complex regulatory rules around wholesale prices were partly to blame for the rise in costs.
“From the point of delivery, the cost of serving customers in the UK is about £100 per annum, and in France it is €45, so more or less half,” said Simone Rossi, CEO of EDF UK
“This is not to do with wholesale price or gas marginal costs but is driven by the fact that we have a very complex regulation which has become more sophisticated over the years.”
One way to reduce costs is if the government changes the way wholesale gas prices impact costs, said Rachel Fletcher (Director of Regulation and Economics at Octopus Energy).
Fletcher told members of parliament that the government should urgently consider changing how wholesale gas prices drive changes in UK energy costs in order to help British households.
“There are proposals on the table we think the government should be looking at to take gas out of the wholesale market and put it into a strategic reserve.
“I think that needs very serious and urgent consideration. If we continue on the path that we are on right now, in all likelihood electricity prices for a typical customer are going to be 20% higher in four or five years’ time than they are now, and that’s even if wholesale prices halve.”
