UK energy price freeze ‘to cost £23 bn this winter’

Britain’s household energy price guarantee will cost some £23 billion ($28 billion) this winter, analysts estimated Thursday after regulator Ofgem lifted its cap on electricity and gas charges.

The state’s outlay for the policy, aimed at easing a cost-of-living crisis, will stand at £950 per home over the colder winter months, according to a LinkedIn post by research consultancy Auxilione.

Ofgem announced Thursday it will lift its so-called cap, which sets prices for consumers to an annual level of £4,279 in January from about £3,500.

The cap does not currently affect consumers but will slam the public purse because the government is heavily subsidising bills.

Since October, Britain has frozen the average annual bill at £2,500 as it seeks to cushion homes from rocketing energy prices after key producer Russia’s war on Ukraine.

The state guarantee will rise to £3,000 in April as part of last week’s tax-hiking austerity budget.

Official data showed Tuesday the energy price freeze added £4.0 billion to state borrowing in October alone.

The government has forecast that its energy price guarantee will cost £25 billion in 2022/2023, and a further £13 billion in 2023/2024.

Prime Minister Rishi Sunak has meanwhile agreed to a public information campaign to encourage Britons to save energy, media reported Thursday.