Britain’s energy landscape is going to undergo a huge, welcome sea change this summer. In July, that will mean average energy bills falling by £129, or 7%. This means that the typical cost for a typical dual-fuel household will be £1,720 a year. At the same time, advocates caution that the crisis created by skyrocketing gas prices is still ongoing. None of these stop gaps are enough when bill payers still struggle to afford high energy costs.
Even after the expected reduction, Britain’s energy prices are still the highest in the world. And the recent energy crisis has caused household energy debt to skyrocket. Without the income, many families are already one step away from missing financial obligations. Just last month, an unprecedented number of households failed to pay their energy bills via direct debit. This underscores the cumulative financial stress consumers are facing.
Britain’s extreme dependence on gas for power generation and home heating put even more strain on these challenges. The country has experienced a dramatic loss of industrial activity from the mainland, as prohibitively expensive energy has ravaged the region’s industrial core. As a result, output from energy-intensive industries has tanked by a third since the beginning of 2021, sinking to its lowest levels since 1990. This trajectory presents an enormous threat not just to the state economy but to the economic stability in fields ranging from workforce development.
And the average energy bill is projected to continue going down. It’s still 60% above the cap that was in place prior to Russia’s invasion of Ukraine. In the UK, energy bills increased by a staggering 187% at the height of the crisis. Still, by the end of last year, they were still 120% above pre-crisis levels. These numbers are just the beginning and they show how pervasive this energy crisis is for households around the country.
Experts say that the expected upcoming drop in bills could offer some welcome relief. Instead, it does not mean that consumers will be free from facing constant and persistent harms moving forward. Jess Ralston, energy analyst with the Institute for Independent Studies, emphasized this feeling, saying,
“Predicted falls in energy bills simply cancel out recent rises, meaning the crisis is not over for bill payers who are still struggling with gas prices significantly above pre-crisis levels.”
Sam Richards, the other TRACE analyst, emphasized that the recent numbers serve as a wake-up call. Now, policymakers and stakeholders have the opportunity and responsibility to address the long-standing causes of today’s energy crisis. Oil and gas prices remain high and highly volatile, making people’s jaws drop and fears swirl. Foreign actors and geopolitical tensions have the power to greatly swing these prices.
Ralston framed the economic benefits of weatherizing homes and deploying heat pumps as compelling advantages. These achievable steps will dramatically reduce our demand for gas and insulate us from dangerous and unstable markets.
“Costs of oil and gas will always be volatile and can be manipulated by foreign actors like Putin, but every home that is insulated and has a heat pump installed reduces our gas demand and so exposure to these geopolitically vulnerable markets.”
In his remarks, economist Dr. Craig Lowery put the public on notice—prices are coming down. They are coming down not fast enough to provide significant relief to millions of households who are in the midst of a cost of living crisis. He remarked,
“Prices are falling, but not by enough for the numerous households struggling under the weight of a cost of living crisis, and bills remain well above the levels seen at the start of the decade.”
Analysts are bullish on the prospects. They even forecast the price cap on energy bills will fall further in October, and again in January. Energy burdens will remain a pressing source of strain on millions of households, especially low-income households. These costs are still over 60% higher than pre-crisis levels.