Electricity prices could surge by 20 per cent over the next four to five years, according to Britain's largest energy supplier. Octopus Energy warned MPs that urgent government action is needed to reform how wholesale gas prices influence UK energy costs.
The warning comes just two weeks after energy bills for typical households in England, Scotland and Wales rose by two per cent. Average annual costs for gas and electricity increased from £1,720 to £1,755 for households paying by direct debit.
Gas market reform urgently needed
Rachel Fletcher, director for regulation and economics at Octopus Energy, told the Energy and Net Zero Select Committee that fundamental changes to gas pricing mechanisms are essential. She urged the government to consider removing gas from the wholesale market and placing it into a strategic reserve.
"If we continue on the path that we are on right now, in all likelihood electricity prices for a typical customer are going to be 20% higher in four or five years' time than they are now, and that's even if wholesale prices halve," Fletcher warned MPs on Wednesday.
Regulatory complexity driving up costs
Simone Rossi, chief executive of EDF UK, blamed complex regulations for making British energy more expensive than European alternatives. He revealed that serving customers in the UK costs approximately £100 per year, compared to just 45 euros in France.
"This is not to do with wholesale price or gas marginal costs but is driven by the fact we have a very complex regulation which has become more sophisticated over the years," Rossi explained. Energy bosses called for regulatory simplification to help reduce the burden on British households.
Sources used: "PA Media" Note: This article has been edited with the help of Artificial Intelligence.
