- UK energy bills are set to rise after wholesale electricity prices hitting record high.
- Last month, the electricity market price crossed the mark of £100 a megawatt-hour due to which price cap was raised by Ofgem.
After energy prices touching record highs in the UK wholesale electricity market last month, the household energy bills are expected to rise. This has raised concerns for more and more families falling into the trap of fuel poverty. Last month, the electricity market price crossed the mark of £100 a megawatt-hour. This was the first time since 1990 that the prices went up this high, as per the analysis by Imperial College London. In July, the average market price went up by 14%, and reached £107.50/MWh. This was well above the earlier record-high price of £96/MWh, during the global financial crisis of 2008.
Last month, the Office of Gas and Electricity Markets (Ofgem), which is the independent energy regulator in Great Britain, raised its price cap on energy bills by over 12%, due to a spike in market prices of electricity and gas, which is at an unaffordable level for most UK households. Social energy tariff priced below this price cap is being called for, as over 500,000 households would be pushed into fuel poverty this winter. The step taken by Ofgem will force around 11 million households to pay £139 more on their dual-fuel energy bill of £1,138 on an average. The average bill will increase to £1,309 from £1,156 for an additional 4 million households who use prepayment meters.
According to the report, Britain eventually needs to lessen its dependence on fossil fuels to save itself from the effects of price swings.
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5 stocks to look at
National Grid plc (LON: NG)
London-headquartered multinational utility company National Grid plc transmits and distributes electricity and natural gas. It operates via UK Gas Transmission, UK Electricity Transmission, US Regulated, and National Grid Ventures (NGV) and other segments. With a significant market capitalisation of £34,226.62 million, the company is listed on the London Stock Exchange since 2002 and is also a constituent of the FTSE 100 index. Its earnings per share is 0.47 and its 1-year return is 13.23%.
SSE plc (LON: SSE)
Headquartered in Perth, Scotland, SSE plc is a multinational energy company which generates, transmits, distributes, and supplies electricity. The three segments through which the company operates include Wholesale, Networks, and Retail. With a significant market capitalisation of £17,239.74 million, the company is listed on the London Stock Exchange since 1991 and is also a constituent of the FTSE 100 index. Its Earnings per share is 2.19 and its 1-year return is 34.86%.
Centrica PLC (LON: CNA)
Headquarter in Windsor, Centrica plc is a British multinational energy and services company which provides electricity and gas to consumers in the United Kingdom and Ireland. Additionally, it also offers energy solutions and trading to businesses across the globe. The company operates via Centrica Consumer, Centrica Business, and Upstream segments. With a market capitalisation of £3,067.26 million, the company is listed on the London Stock Exchange since 1997 and is also a constituent of the FTSE 250 index. Its Earnings per share is 0.01 and its 1-year return is 14.56%.
Drax Group Plc (LON: DRX)
Headquartered in Selby, Drax Group plc is a power generation business which, along with its subsidiaries, engages in the generation and supply of electricity across the UK. An international biomass supply chain business is also run by the group. The three segments through which the company operates include Generation, Customers, and Pellet Production. With a market capitalisation of £1,675.38 million, the company is listed on the London Stock Exchange since 2005 and is also a constituent of the FTSE 250 index. Its earnings per share is -0.40 and its 1-year return is 50.93%.
Contourglobal PLC (LON: GLO)
UK-based power generation business Contourglobal PLC along with its subsidiaries is engaged in acquiring, owning, developing, and operating wholesale power generation businesses across Europe, Latin America, and Africa. The segments in which the company operates include Thermal Energy and Renewable Energy. With a market capitalisation of £1,267.66 million, the company is listed on the London Stock Exchange since 2017 and is also a constituent of the FTSE 250 index. Its earnings per share is -0.04 and its 1-year return is -5.56%.