36 LAWYERMONTHLY SEPTEMBER 2022 The growing energy crisis has focused on the households likely to be affected, with estimates that 50% or even more could face fuel poverty this winter. A Looming Regulatory Crisis Multiple factors have converged to prompt the energy shortage and broader costof-living crisis. The easing of lockdown measures globally caused a surge in energy usage coinciding with worldwide inflation and a historically long winter, while many energy sources struggled to keep up with demand. Together with the ongoing Russian war in Ukraine, prompting governments to search for alternative energy sources, this has caused the price of gas to reach levels that are almost triple those seen at the beginning of the year. Though these surging energy prices have been seen across Europe and overseas, the UK has come off worse than most, due in part to a higher-than-average dependency on gas boilers and gas-fired power stations. These deficiencies have been reflected in the so-called ‘energy price cap’. In the UK, this refers to national energy regulator Ofgem’s ability to set the maximum amount that energy suppliers are permitted to charge households per kWh of gas and electricity. On 26 August, Ofgem announced that the annual energy price cap would rise to £3,549 beginning 1 October 2022, an increase of 80%. For those on prepayment meter – which includes many low-income households – the cap rose from £1,309 to £2,017 a year. Further increases to the cap are likely to occur on 1 January and 1 April next year, with independent energy consultancy Auxilione predicting an energy cap of £5,083 by April 2023. If this prediction becomes reality, average household energy bills in the UK will have more than quadrupled within a span of 18 months. Of course, operating costs will also rise significantly for businesses and all manner of public utilities that do not meet the ‘household’ criteria. These costs are currently falling on private individuals, with energy producers themselves appearing less affected. Energy giant BP, for instance, posted its highest profit margin for 14 years at the beginning of August. Resultant friction as households have been faced with (in some cases) unpayable bills has contributed to a growing sense of civil unease in the country.
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