UK Energy Prices Expected to Double Next Year... 30% of All Households Facing Poverty

Energy Bills Expected to Soar from 250,000 to 560,000 Won per Month
Concerns Over Income Falling Below Poverty Line Due to Electricity Bill Shock

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] It is forecasted that the energy bills per household in the UK will more than double from early next year, putting about 30% of all households in a state of poverty. As Russia continues to pressure by cutting off gas and oil supplies, there are concerns that energy prices will soar further, significantly increasing the number of households falling into poverty.

On the 9th (local time), Cornwall Insight, a UK energy market research firm, warned in a report that the energy price cap in the UK is expected to reach ?4,226 (approximately 6.8 million KRW) in January next year, more than double the current annual ?1,971. On a monthly basis, this means a sharp increase from the current ?164 per month to ?355.

Cornwall Insight predicted that the energy price cap would rise sharply to ?3,582 starting in October, when heating energy demand significantly increases. This is an upward revision from the earlier forecast of ?3,359 for October made just a week ago. Cornwall Insight explained, "We considered the shortening of the energy price cap adjustment cycle and the continued surge in wholesale gas prices."

Until now, the UK's gas and electricity market regulator, OFGEM, has regulated the energy price cap twice a year in April and October. However, starting next year, this cycle will be shortened to every three months, allowing the cap to be adjusted four times a year. This measure was taken after Russia's invasion of Ukraine caused energy prices to soar, leading to the collapse of small and medium-sized energy companies before cost increases could be reflected in consumer prices.

With the expected surge in energy prices, there are concerns that the number of impoverished households will also increase significantly. According to CNN, the UK End Fuel Poverty Coalition (EFPC) stated in a press release that "about 30% of all UK households, equivalent to 10.5 million households, could fall below the poverty line in income during the three months following early next year."

The UK government defines poverty as household income falling below 60% of the median household income across the UK, which was ?31,000 annually last year. The so-called "energy poverty," where incomes fall below the poverty line due to the shock of soaring electricity and gas bills, is worsening.

As Russia's pressure on oil and gas supplies is expected to intensify further, the number of impoverished households is feared to increase even more. According to AFP, Russian state-owned pipeline company Transneft announced that it will halt oil supplies through the Druzhba pipeline, which passes through Ukraine to Hungary, Slovakia, and the Czech Republic. Transneft blamed Ukraine, stating, "Ukrtransnafta, Ukraine's oil transmission company, stopped payments and cut off supply citing EU sanctions," shifting responsibility to the Ukrainian side.

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