Energy price hikes fuel fears across the continent as winter looms 

The Nord Stream 1 Baltic Sea pipeline and the transfer station of the OPAL gas pipeline, the Baltic Sea Pipeline Link, in Lubmin, Germany. Picture: AP Photo/Markus Schreiber

Energy bill increases are fuelling consumer fears across the continent as winter looms closer and politicians scramble to cushion the impact of price hikes.

SSE Airtricity recently announced it will increase unit price of its electricity by 45% and the unit price of its gas by 46% from the start of October, affecting around 250,000 electricity customers and 85,000 gas customers.

In the UK, households will pay almost triplethe price to heat their homes this winter compared with a year ago, a jarring increase for millions of people already struggling to afford everyday essentials.

Industry regulator Ofgem raised its cap on domestic energy bills to a record £3,549 (€4,200) beginning October 1. That amount is expected to go even higher in January as the UK competes with other nations for limited gas supplies.

“Come October, low-income households will simply not turn on their heating,” said Peter Smith, director of policy and advocacy for the National Energy Action charity.

The cost of energy has soared this year due to inflation and supply issues emerging after Russia invaded Ukraine in February. 

UK inflation hit a 40-year high last month, and Citigroup Inc said it could surge past 18% in January. Meanwhile, inflation reached 9.6% in Ireland last month.

The new UK energy price cap, a 178% increase on last winter’s level and 80% up from April, regulates how much suppliers can charge households per unit of energy and applies to about 24m customers on variable tariffs.

In Germany, consumer sentiment is projected to hit a record low for the third month in a row in September as households brace for energy bills to go through the roof, a survey showed.

The GfK institute warned in its consumer sentiment index, that the situation could become even worse in coming weeks and months if there is not sufficient fuel, especially gas, to heat homes, pushing bills even higher.

German households will have to pay several hundred euros more a year for gas under a levy, to be imposed from the start of October through to March 2024, that is meant to help utilities cover the cost of replacing Russian supplies.

Meanwhile, Russia is wasting large volumes of natural gas by burning it in a huge orange flare near the Finnish border at a time when it has sharply cut deliveries to the European Union, scientists and analysts said.

-Bloomberg and Reuters