Households in the UK pay the most out of any country across Europe for their electricity, new analysis has found. The reasons for this include levies imposed by the UK Government on energy companies and the consequences of the move away from gas.
Analysis by the Financial Times shows that UK households pay more than Italy, Germany, the Netherlands, Spain, Estonia, France, Greece and Hungary, at just over €0.6 per kWh. This means the prices paid in the UK are up to 30% higher than in parts of mainland Europe.
Although countries like France have placed caps on electricity prices, the UK has its own reasons for being top of the leaderboard. One of these is the levies on energy companies in the UK, including "green levies" used to fund environmental policies like renewable energy and energy efficiency.
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These green levies accounted for around 7.8% of the average household direct debit energy bill as of April, according to factchecker FullFact in May. Liz Truss announced plans in Parliament today to suspend these levies.
The move away from coal in the UK is another major reason, according to the FT. The UK has shifted away from coal and towards natural gas quicker than many of its European neighbours, which leaves us more exposed to fluctuations in gas prices.
A relatively small amount of the UK's gas is imported from Russia, where prices have skyrocketed since the start of the war in Ukraine. But there are a number of factors - including storage capacity and declining North Sea gas production - that mean the UK is still reliant on Russian gas prices, although the fact that the UK has no direct pipeline to Russia helps mitigate this.
There is some direct support available for households in Wales this winter to deal with the dizzying cost of fuel. Through the Welsh Government's winter fuel scheme, around 400,000 households will receive £200 from the fund.
But the power to set the energy cap sits with Ofgem in a piece of legislation introduced to Parliament by Theresa May's government, and the area is not devolved. This means any action to cap the price of energy falls to Ms Truss and the UK Government.
In a statement to Parliament today (Thursday, August 8), the new Prime Minister announced a cap on prices for two years which she claims will save a typical household £1,000 a year. This includes a suspension of the aforementioned green levy.
She also announced support for "businesses, charities and all public sector organisations", offering an equivalent guarantee for six months, with support for vulnerable sectors including hospitality to follow.
She said: "This is the moment to be bold. We are facing a global energy crisis and there are no cost-free options. There will be a cost to this intervention.
"The way we are going to defray the cost of this intervention is first of all by ramping up supply.... we have created a new energy supply taskforce. They are already negotiating new long-term energy contracts with domestic and international gas suppliers to immediately bring down the cost of intervention."
The PM also announced other measures, including a new licensing round, to try and reduce costs. She will conduct two reviews - one into energy regulation and another into reaching net zero by 2050 in a way that is "pro-business" and "pro-growth."
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