Today saw the price leap to another all-time blamed on low levels of gas in storage and reduced supplies from Russia. It has prompted fears that millions of households will be hit with more punishing price hikes
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Households were today warned energy bills could rocket by up to £800 a year next spring – as the wholesale cost of gas hit a new record high.
A toxic mix of factors have led to a more than 700% surge in the traded cost of gas over the past 12 months.
Today saw the price leap to another all-time blamed on low levels of gas in storage and reduced supplies from Russia.
It has prompted fears that millions of households will be hit with more punishing price hikes.
Around 15 million households have seen bills leap since the start of October after energy regulator Ofgem upped the price caps its polices to allow suppliers to claw back earlier wholesale cost increases.
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The cap on standard tariff and other default tariffs jumped by an average £139 a year to £1,277 per annum.
However, ongoing sky-high energy costs have led to mounting concerns that the cap could spiral in April, when it is next reviewed.
Joe Malinowski, founder of energy price comparison website TheEnergyShop.com, said: “While this month’s energy price increase will blow an unwelcome hole in many people’s finances. it is nothing compared to what is coming next.
“As things currently stand, we are headed for another increase of at least £500 on 1 April 2022.
“If things don’t settle down soon, increases of £600, £700 or even £800 cannot be ruled out.”
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Many households who are not on standard tariffs, and coming off cheap fixed rate deals, are being landed with big bill shocks.
Others who are not on the gas grid and rely on heating oil are also seeing eye-watering price rises.
Wholesale energy costs differ, depending on when it is needed.
The cost of gas for next-day delivery hit £4-a-therm today, up sharply from £3 -a-therm on Tuesday, before easing back a bit.
One industry source said: “An increase of that scale in one day is incredible. I have never seen anything like it.”
The spikes comes amid low gas stocks, reduced supplies from Russia, colder temperatures, and less electricity coming from wind farms, requiring more from gas.
Sam Peek, analyst at energy consultants Cornwall Insight, said: “The global gas supply outlook remains notably tight at the moment.
“We are now entering the colder autumnal and winter seasons with European gas storage levels anywhere between 15 to 20 percentage points lower than this time last year.”
Rocketing wholesale costs have been blamed for a wave of supplier collapses,with nearly 10 failures in September alone.
Credit ratings agency Moody’s today warned more failures were likely.
Mr Malinowski said: “Energy suppliers are falling like dominos. They are not failing just because they are bad businesses.
“Companies, good and bad, are failing because the energy price cap is not allowing them to pass on their costs.
“Simply put, government policy is bankrupting energy suppliers.”
He went on: “How many energy suppliers are left standing when the situation corrects itself, which it eventually will, is one for the politicians and bureaucrats.
“But if they don’t make that decision quickly, it will be made for them and the outcome will be terrible for consumers, both in the short-term and the long-term”.