UK Government to Provide 16 Trillion Won Support to Households Amid Soaring Electricity and Gas Prices

Rishi Sunak, UK Chancellor of the Exchequer
Photo by Reuters Yonhap News

[Asia Economy Reporter Park Byung-hee] The UK government announced support measures on the 3rd (local time) to help households struggling with rising energy costs.

According to major foreign media on the day, Rishi Sunak, the UK Chancellor of the Exchequer, announced that ?9 billion (approximately 14.66 trillion KRW) will be provided to support households. Household electricity and gas bills are expected to rise sharply from April, prompting the government to step in with support.

The energy regulator, the Office of Gas and Electricity Markets (Ofgem), announced plans to raise the price cap on electricity and gas by 54% starting in April. As a result, the average annual electricity and gas price cap for UK households is expected to increase to ?1,971 from April.

The reason Ofgem is raising the electricity and gas price cap is due to a surge in bankruptcies among energy companies unable to cover production costs.

The UK privatized the retail electricity and gas sectors in 1999. Ofgem sets and announces the price cap twice a year, in April and October, to prevent private companies from excessively raising gas and electricity prices.

Since last summer, the price of natural gas, a major energy source, has surged, causing about 30 energy-related companies to go bankrupt. Production costs soared, but companies could not freely raise prices.

Recently, due to the conflict between the West and Russia over Ukraine, natural gas prices have remained high. Consequently, Ofgem was expected to significantly raise the electricity and gas price cap, and the government has introduced household support measures accordingly.

This content was produced with the assistance of AI translation services.