Consumers typically build up credit with their suppliers during the summer – when energy consumption declines – limiting the shock of higher demand in the winter. But soaring gas and electricity prices have made this summer expensive and fueled warnings of an even deeper crisis in the colder months ahead, with the potential for “scheduled” blackouts looming.
Household energy debt in July was more than double the level in September, according to the price comparison service Uswitch.com. Every year since 2018, when a UK price cap was introduced, household debt has gradually fallen over the summer. But this year, the debt increased by 10% between April and July.
“Energy debt has reached an all-time high with the worst possible timing, turning this winter’s energy price hike into a deeply precarious situation for many households,” said Justina Miltienyte, head of policy at Uswitch. com. “The cost-of-living crisis is already squeezing budgets considerably, even in the summer months when families grapple with rising bills across the board.”
UK energy suppliers earlier this year informed legislators of the large number of customers who are in arrears and that the crisis will go beyond what any of them could handle. UK wholesale gas prices have more than doubled since then, paving the way for millions more to struggle to pay their bills this winter.
Some 6.5 million households owe suppliers an average of £206, Uswitch.com said in a report on Wednesday. The number of people in credit fell to 9 million from 11 million in April.
Although the regulations have shielded consumers from some of the price spike, this is expected to change in October with the next energy price cap adjustment. Cornwall Insight’s analysis predicted that average annual bills will increase by more than 80% when the cap is next revised and will rise further at the start of next year.
Britain is also planning organized blackouts for industry and households over the winter when cold weather can coincide with gas shortages.
The electricity capacity shortfall could be about a sixth of peak demand, under the latest “reasonable worst-case scenario”, even after emergency coal-fired power plants come online, Bloomberg reported, citing people familiar with the issue. government planning.
Under this outlook, coupled with below-average temperatures and reduced electricity imports from Norway and France, Britain could be exposed to four days in January when it may have to trigger lockdown measures. emergency to conserve gas, according to the report.
The Department for Business, Energy and Industrial Strategy did not immediately respond to a Reuters request for comment.
The Bloomberg report comes after the Bank of England last week warned that Britain was on course for a long recession as unprecedented energy prices push inflation towards 13%, but any political response has been hampered by the race to select a new Prime Minister on 5 September. .
As European governments seek to retain gas use and increase storage following Russia’s invasion of Ukraine, the British government has split into warring camps led by Foreign Secretary Liz Truss and former finance minister Rishi Sunak who, in competition to be the next prime minister, clashed over how to respond.
Charities, business groups and politicians have asked Truss and Sunak to explain how they will help Britons cope with an expected 82% rise in energy prices in October. BM