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Energy bills in the UK are set to surge more than expected this winter, with many households struggling to be able to pay them, after Russia further slashed gas deliveries to Europe, sending gas and energy prices for the winter and for next year soaring, UK-based consultancy BFY Group said on Wednesday.
Earlier this week, Russia said that gas supply via Nord Stream—the main link between Russia and Germany—would be cut to just 20% of the pipeline's capacity, days after Gazprom restarted the pipeline at 40% capacity after regular maintenance. The Russian explanation for the even lower gas flows to Europe is that another turbine at a compressor station was sent for repairs, while the one that Canada returned from repairs has yet to be installed.
The rally in wholesale prices, caused by the latest Russian cut in gas deliveries, has increased BFY Group's price cap forecast for the coming winter, Gemma Berwick, Senior Consultant at BFY Group said.
The UK has a so-called Energy Price Cap in place, which protects households from excessively high bills by capping the price increases that providers can pass on to them. In April this year, the Energy Price Cap was raised by more than 50%, doubling the number of fuel-stressed households in the UK overnight. But the UK hasn't seen the worst of its cost-of-living crisis as energy bills could soar by another 42% in October when the energy regulator will raise the energy price cap again.
BFY Group's latest forecast after Russia further cut supply to Europe now sits at $4,120 (£3,420) for the fourth quarter of 2022 and at $4,640 (£3,850) for the first quarter of 2023, based on average consumption.
"With typical usage patterns, this means that bills for January alone will now be in excess of £500 [$602]. Further support will be required for the majority of households for them to not be classed as in fuel poverty," BFY Group's Berwick said.
"Huge swathes of the British public aren't going to be able to afford their bills this winter. Average families with two working parents will be in fuel poverty," Berwick said, as carried by The Telegraph.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.