UK to extend cap for energy bills beyond ’23

Bloomberg

The UK will extend its price cap for energy bills beyond 2023 as it seeks to help 22 million households cope with rising costs.
The measure, announced during the annual Queen’s Speech to Parliament, is in the government’s Energy Security Bill. It aims to provide the legal framework needed to achieve ambitious net-zero emissions goals while keeping energy affordable for households.
“Protecting consumers from unfair pricing, the energy price cap is the best safety net for millions, preventing suppliers from overcharging consumers,” Prince Charles said in prepared remarks, as he stepped in for the Queen to deliver the speech.
Energy costs in Britain have been soaring, amid a fuel-supply crunch that began last year and Russia’s war in Ukraine, which pushed commodity costs to record levels. The UK has seen dozens of suppliers go under as they face surging wholesale costs, but are limited in what they can charge customers due to the price cap.
The cap, introduced in 2019, was intended to be temporary and only stay in place until 2023 at the latest. The bill paves the way for it to become a longer-lasting part of the market.
The measure has become controversial as the number of customers on capped tariffs has soared. Suppliers say that they have been selling customers
energy for less than they paid for it, leading to losses of about 1,000 pounds ($1,235) per household at times.
Estimates by Cornwall Insights showed that the cap is expected to rise 32% in October and will stay above 2,200 pounds until at least the following winter.
In its efforts to reach net zero, Prime Minister Boris Johnson’s government has set bold goals, including a 50-gigawatt target for offshore wind by the end of the decade. The next step will be to make sure the grid and energy system
are ready to cope with huge amounts of intermittent renewable electricity.
Britain hasn’t had any major energy legislation since 2013, and it needs an update to make sure it can make the most of new technologies like hydrogen and carbon capture and storage.
The bill will also pave the way for a new electricity system operator to be established, removing the role from National Grid Plc after three decades.