The energy industry has warned that the UK must prepare now for another energy price shock as volatility in global fossil fuel markets continues.
In a new briefing, A Better Approach to Energy Bill Support, Energy UK says government should develop plans to support households if bills rise again later this year. Some analysts suggest typical annual energy costs could increase by around £300, with higher rises possible if global tensions continue.
The report argues that the UK should learn lessons from the last crisis, when universal support schemes cost more than £35bn. Instead, future support should be better targeted at households most in need, while any universal measures should focus on lowering electricity costs.
Energy UK is calling for a rapid taskforce involving government, industry and civil society to improve targeting systems and ensure support can be delivered quickly if prices rise again.
The warning comes as wider debate continues about how best to protect households from energy price shocks.
New analysis from the University of Oxford’s Smith School found that a fully renewable UK energy system could cut household energy bills by up to £441 a year. In contrast, maximising oil and gas extraction from the North Sea would save households between £16 and £82 a year, but these savings would only be realised if the tax revenues from extra drilling were redistributed directly to households.
Dr Anupama Sen, co-author of the analysis, said claims that North Sea drilling would significantly reduce household bills were “sheer fantasy”.
A spokesperson for the End Fuel Poverty Coalition said:
“Energy prices are once again being driven by instability in global fossil fuel markets and households are being left exposed to the consequences.
“Millions of families are still recovering from the last energy crisis, with record levels of energy debt and many already struggling to afford today’s bills. Without action, another price spike could push even more households into fuel poverty.
“We support calls for the Government to convene a taskforce and prepare an emergency energy support framework that can protect those most at risk while prices remain volatile. That means targeted bill support, more help for households using LPG, heating oil and heat networks, plus urgent action to tackle the legacy of energy debt.
“But this crisis also reinforces the long-term lesson: as long as the UK remains dependent on expensive oil and gas, households will remain exposed to global shocks. That means we need action to bring down energy usage via building upgrades as well as action to bring down electricity prices through market reform and more renewables.”