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Highlights
- As supply and demand in the global wholesale energy market remain under the strain, the typical UK household’s energy bills could reach over £3,600 annually later this year.
- The UK government has already announced £37 billion of help for UK households, including £400 discount in energy bills.
With the global energy supply and demand likely to remain under strain, UK household’s energy bills could well go over touch £3,600 annually later this year and may continue to push up their costs until at least 2024.
The research firm Cornwall Insight has raised its estimates of a £3,363 rise in energy price cap in January to £3,615 a year. The energy price cap is the maximum amount a supplier can charge its customers and is set quarterly by the energy industry regulator, Ofgem. The new estimate is much higher than £1,400 a year as recently as October last year. Further, the research firm has revealed that energy bills will top £3,700 in the second quarter of 2023 before falling back to £3,470 last in the last three months.
The European countries are making a contingency plan to fulfill their energy demand this winter after Russia reduced its oil and gas supply in response to western sanctions.
Britain usually imports its gas from Europe, but with Russia deciding to cut supply to the region, it could impact the UK gas supplies as well. This means that the UK need to maintain a margin above the forecast demand to deal with any spike in demand during winter.
The UK government has already announced £37 billion of help for UK households, including a £400 discount on energy bills which will be spread across six installments from October to March next year. Further, a £650 payment will be made to over eight million low-income households and a £150 rebate from council tax bills for some homes.
Let us take a look at three FTSE listed energy utility stocks.
ContourGlobal Plc (LON: GLO)
The FTSE 250 listed electricity generation company ContourGlobal Plc on 2 August enjoyed a market cap of £1,688.08 million. With the Earning Per Share (EPS) of 0.02, its shares were trading at GBX 257.00 as of 11:35 AM (GMT+1) on Tuesday. The company has delivered positive one-year and YTD returns of 30.70% and 34.25%, respectively.
SSE Plc (LON: SSE)
FTSE 100 constituent SSE Plc enjoyed a market cap of £19,042.11 million as of 2 August. The global energy firm owns, develops and operates energy related infrastructure and its shares were trading slightly down by 0.25%, at GBX 1,778.50 as of 11:30 AM (GMT+1) on Tuesday. The company delivered one-year and YTD returns of 22.64% and 9.12%, respectively.
National Grid Plc (LON: NG.)
NG. operates as the electricity system operator (ESO) across the UK and has already secured contracts with five coal power station operators to be on standby if they need more energy this winter. NG.’s shares on Tuesday were down by 1.88%, at GBX 1,140.00 as of 11:41 AM (GMT+1). The company has delivered positive one-year and YTD returns of 23.42% and 7.61%, respectively.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
