U.K. Energy Price Cap to Rise 80%, Regulator Says - The New York Times - 0 views
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with leaders from London to Berlin mounting costly state interventions, it augurs a reversal of decades of liberalization in energy markets.
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France has capped gas and electricity rates, subsidized the cost of gasoline and diesel fuel and spent 45 billion euros ($45 billion) to help hard-hit families.
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Germany has moved to take command of its energy markets, subsidizing new liquefied gas import terminals and bailing out one of the largest utilities, Uniper,
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In Britain, where gas accounts for roughly 40 percent of electricity generation but has a disproportionate effect on its cost
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if the price of beer had risen as much that of natural gas over the last year, a pint in a pub would cost £25, or about $30.
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“How can you adapt to a rise like this?” said Tewdos Gebreysus, a 35-year-old Uber driver in London, who said he was now paying four times as much on his energy bills as he was at the beginning of the year.
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She and her opponent, Rishi Sunak, reject more sweeping measures, like using state subsidies to freeze the energy price cap for two years.
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“We have a sort of worst-of-both-worlds system,” said Jonathan Portes, a professor of a professor of economics and public policy at Kings College London. “Household prices are related to the spot market, and we sort of save up price increases and dump them on households all at once.”
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Britain is far less dependent on Russian gas than Germany or other European countries. But the structure of its energy market makes it extremely sensitive to fluctuations in the market price of natural gas.
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The Bank of England has predicted that inflation will peak at 13 percent in October as the new energy prices turn up in household bills. Other estimates are higher; analysts at Citibank have said the rate could reach as high as 18 percent early next year.
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Britain’s opposition Labour Party recently proposed to freeze energy tariffs where they are now, paying part of the £29 billion cost by increasing the so-called windfall taxes that the Conservative government imposed this year on oil and gas giants operating in the North Sea
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The leadership contest has been dominated by Ms. Truss’s promise to cut taxes, which is popular with the rank-and-file Conservative Party members who will vote for the next prime minister. But economists say it would do little to protect the most vulnerable people from the ravages of soaring energy bills.
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With another hefty price increase looming in October, the public outcry over energy costs is likely to haunt the next prime minister. Unless the government develops an effective response, some analysts said, the issue could cripple the government and tilt the next election to the Labour Party.
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at a campaign gathering with Mr. Sunak on Thursday, she said the solution to the crisis was not to throw more money carelessly at consumers. Mr. Sunak, who has proposed cutting value-added tax on energy bills, warned that without drastic action, “there’s a high risk that millions of people will fall into destitution.
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Beyond the mechanics of the system, critics said Britain had lagged Germany and other European countries in urging people to reduce energy consumption and increase the efficiency of their homes and offices.
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“This is the poverty of our politics,” said Tom Burke, the chairman of E3G, an environmental think tank, and a former government adviser. “You’ve got to do some financial work to address the costs in the short term, and then you’ve got to really drive forward on demand reduction in the long run.”