British Gas has said household energy bills are likely to remain high for the foreseeable future as wholesale market prices remain at more than double the normal level.
The UK continues to face risks to its gas supplies after Russia’s invasion of Ukraine, according to the chief executive of the energy supplier’s parent company, Centrica. Chris O’Shea said: “the first act of the crisis” was over but there was a “danger” that people could become complacent.
“I think what we’ve got to remember is the energy prices had more than doubled before Russia invaded Ukraine,” he told BBC Radio 4’s Today programme. “Now, prices are back down to pre-invasion levels but they’re still two-and-a-half times the long-run average.”
Energy bills for 27 million households are due to fall from Saturday as the energy regulator Ofgem reduces the price cap to the equivalent of £2,074 a year for the dual-fuel usage of a typical household.
But the new price cap, which limits the maximum amount suppliers can charge for each unit of gas and electricity, is still about £800 higher than it was before Russia’s invasion of Ukraine and is forecast to remain high at least until the end of winter.
The cap is projected to fall to just over £1,870 from October, according to analysts at Cornwall Insight, then rise slightly from January next year to just over £1,900.
On Friday, Centrica announced it would almost doubled the
amount of gas stored at its Rough storage facility off the east Yorkshire coast before this winter.
The company said its investment in Rough, which it reopened in October last year, would help to improve the resilience of the UK’s winter gas supplies.
O’Shea said: “I think that there’s a danger that we get complacent because last winter was OK and because prices are quite stable now. But when we had trouble between the Wagner group and the Russian military last week we saw energy prices go up by about 20%.
“Chinese economic activity at the moment is relatively low. If that starts to pick up we’ll see more demand for gas in the form of LNG[liquefied natural gas], then we’ll see European gas prices go up, so there could be more volatility to come.”
O’Shea’s comments reignited calls from campaign groups for the UK government to do more to keep a lid on energy costs by supporting investment in renewable energy and household energy efficiency.
Sam Richards, the founder and campaign director for Britain Remade, said: “The only way we are going to bring down energy bills for millions of people is if we get spades in the ground and get building the clean secure domestic energy infrastructure Britain needs.”
He called on the government to scrap the “senseless” ban on onshore wind power in England by tweaking planning restrictions.
“High energy bills are not inevitable,”Richards said. “Britain can have cheap and reliable energy for decades to come, without been reliant on volatile international gas markets, but we need to get building now.”
