Britons ‘overpaid £7.2bn on energy bills over two years’

A new report has found that the UK and Italy have paid the highest gas spot prices during the period of energy crisis

Big Zero Report 2022

The way electricity prices are still determined by gas prices has pushed British households to pay an extra £7.2 billion on energy bills in 2021-22.

That’s according to a new report by the independent financial think tank Carbon Tracker Initiative which suggests Europe’s most gas-power-dependent countries, the UK and Italy paid the highest gas spot prices during the period of high gas price volatility.

Analysts say the rise in British energy bills reflects the existing link between soaring gas and electricity prices.

Currently, in Britain, electricity prices are still dictated by gas producers who provide less than half of the UK’s electricity.

Senior Analyst and report author Jonathan Sims said: “Our findings show the extent to which the global gas market has over the past two years skewed British power prices to levels unreflective of the technological makeup of today’s generation mix.

“While continuing with marginal pricing for wholesale power market design is preferable to ensure significant changes do not dent investor confidence in the renewables sector at this crucial juncture, the government must protect against any future gas price spikes pulling power market prices up with them.”

A BEIS spokesperson told ELN: “We have already launched a major review into Britain’s electricity market design to radically cut costs of electricity for consumers in the long term, including consulting on changes to the wholesale electricity market that would stop volatile gas prices setting the price of electricity produced by much cheaper renewables. 

To reduce the burden on billpayers in the short term, we have introduced a temporary Electricity Generator Levy on extraordinary returns being made by low-carbon generators, which will help fund energy bill support for households and businesses.”

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