UK lags behind EU states measures to tackle rising energy prices

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UK households are facing a winter of fuel poverty as the energy crisis continues to cripple western countries. But compared to the EU, Brexit Britain seems to be lagging behind measures that could further help taxpayers cope with price increases.

The average UK household electricity price is at least 30 percent higher than in many of its European partners, especially compared to Italy, the most expensive country in the bloc.

According to electricity and gas pricing from Energy Prices, a Dutch consultancy, the UK’s level of government support, taxation and pricing measures are proving important factors when compared to EU member states.

The UK relies heavily on gas for its electricity supplies as it moved faster than its EU neighbours to reduce its reliance on coal.

But while that ensured the reduction of the country’s emissions, it has left the UK more exposed to increasing energy prices driven by Russia’s invasion of Ukraine.

Prices in the UK are expected to rise by 422 percent this winter. In Germany and in Italy they are expected to rise by 388 and 334 percent respectively.

In France, a whopping price increase of 743 percent is expected this winter, but the French government’s measures will ensure consumers on the other side of the English Channel will still be more protected.

France has introduced a cap on electricity prices at 4 percent until the end of 2022.

Italy, France, Germany and Spain have also provided more funds to support households than the UK government.

Britain has so far released a support package of £16bn to help households.

That compares to the €27.3bn in Spain, €49.5bn in Italy, €60.2bn in Germany and €44.7bn in France.

Although the UK has also introduced a one-ff £400 energy bill discount for all consumers and a £500m support package to local councils, in Germany, the government has offered a €300 one-off discount, €200 one-off payment for people on benefits and €100 per child for families on child support.

When it comes to EU-wide support, the EU Commission is also proposing a price cap on Russian gas, alongside measures including a mandatory EU cut in electricity use and a cap on the revenue of non-gas power generators.

Ursula von der Leyen said on Wednesday: “We will propose a price cap on Russian gas… We must cut Russia’s revenues which Putin uses to finance this atrocious war in Ukraine.”

President Vladimir Putin said on Wednesday that Russia will stop supplying gas and oil if price caps are imposed.

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Some EU countries – which would need to approve the EU proposals – are wary of capping Russian gas prices in case that costs them the dwindling supply they still receive from Moscow.

Ms Von der Leyen outlined the EU’s upcoming emergency proposals to lower soaring gas and power prices, which have hiked bills for households and hammered Europe’s energy-intensive industries.

The EU wants to cap the revenue of non-gas fuelled generators and rechannel their “unexpected profits” into measures that support households and companies, Ms von der Leyen said.

European power prices are typically set by gas plants, and the cap would aim to reduce the cost of electricity generated by wind farms, nuclear plants and coal generators that have lower running costs as they are not exposed to surging gas prices.

Oil and gas firms that have posted huge jumps in profits would also be required to make a “solidarity contribution”, the Commission President said, without giving further detail.

Other measures Brussels will put forward include a requirement for countries to cut electricity use during peak hours, and liquidity help for firms facing huge collateral requirements.

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EU countries’ energy ministers will discuss the proposals at an emergency meeting on Friday.

In the UK, newly appointed prime minister Liz Truss said she would set out plans to tackle soaring energy bills on Thursday but would not impose a windfall tax on energy producers, with borrowing instead set to increase to fund the costly intervention.

Ms Truss has vowed immediate action to address one of the most daunting sets of challenges for an incoming leader in post-war history including soaring energy bills, a looming recession and industrial strife.

She chaired a meeting of her new cabinet on Wednesday before making her parliamentary debut as Conservative Party leader, going head-to-head with opposition Labour Party leader Keir Starmer in the high-profile Prime Minister’s Questions.

“I am against a windfall tax. I believe it is the wrong thing to be putting companies off investing in the United Kingdom,” Ms Truss told MPs, adding she would announce more details on Thursday.

A source familiar with the situation told Reuters that Truss was considering freezing energy bills in a plan that could cost towards £100billion, surpassing the COVID-19 furlough scheme.

New finance minister Kwasi Kwarteng told business leaders that borrowing would be higher in the short term to provide support for households and businesses.

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