Weekly News Review - 24th October 2022

Energy bill help to be reduced from April, says new chancellor

A scheme to cap all household energy bills for two years will be cut from April, the new chancellor has said. The government’s Energy Price Guarantee was put in place to limit the price that suppliers could charge for each unit of energy. Now that will only be in place for six months, just to cover this winter.

The Treasury will review support given from April, but Jeremy Hunt said there would be “a new approach” targeting those in the most need. Mr Hunt is trying to save money after the government’s mini-budget left a big projected hole in the public finances. Its plan for large tax cuts sparked turmoil on financial markets over how the plans would be funded.

“Beyond April, the Prime Minister and I have agreed it would not be responsible to continue exposing public finances to unlimited volatility in international gas prices,” the chancellor said. “The objective is to design a new approach that will cost the taxpayer significantly less than planned whilst ensuring enough support for those in need.”

Before this guarantee was introduced, the energy price cap – the highest amount suppliers are allowed to charge households for every unit of energy they use – had been due to rise to £3,549 for a typical household from October. Under the Energy Price Guarantee, announced last month, the Government vowed to limit this figure to £2,500 although higher energy use will result in bills above this figure.

Predictions from consultants Cornwall Insight suggest that, for households that do not receive any support, a typical annual energy bill could be £4,348 in the spring, dropping to £3,722 next winter – however that prediction could be significantly affected by changing wholesale prices.

The consultancy’s chief executive, Gareth Miller, called for the government to use the period in which the EPG is in place to look at more targeted measures and replace the Ofgem price cap, originally devised by the former prime minister Theresa May.

“A world in which we move back to the default tariff cap cannot credibly be one that is among those options, given the heightened cost environment likely to prevail in the medium term and the situation that arose before the EPG was implemented,” Miller said.

Russian strikes prompt power cuts across Ukraine

Ukraine’s energy facilities have again been targeted by Russian forces, leaving parts of Kyiv, Dnipro and Zhytomyr with no power and water. Explosions were heard in the capital shortly after 09:00 (06:00 GMT) on Tuesday and plumes of smoke billowed from around a power station near the Dnipro river. Power and water were cut in Zhytomyr, west of Kyiv, and two facilities were badly damaged in Dnipro.

The latest attacks came 24 hours after Kyiv was hit by “kamikaze” drones. The unmanned drones, believed to be Iranian-made, killed at least five people in the capital and four in the northern city of Sumy, and struck critical infrastructure, with power outages reported in hundreds of towns and villages.

On Tuesday, President Volodymyr Zelensky said, “30% of Ukraine’s power stations have been destroyed, causing massive blackouts across the country”. Further strikes have since followed on Wednesday prompting Ukraine’s national energy company to advise citizens to “charge everything” by 07:00 (04:00 GMT) Thursday because of expected power cuts.

Russia has stepped up attacks in recent weeks on electricity infrastructure in cities away from the front lines. Officials have rushed to repair the damage, but the strikes, ahead of winter, have raised concerns about how the system will respond.

In some cities, Ukrainians are buying power generators and gas burners, while across the country, people have been urged to reduce their energy consumption at peak times. Some towns are already facing rolling blackouts.

Ukrainian MP Lesia Vasylenko said: “We were expecting that Russia will intensify attacks on energy infrastructure and civilian infrastructure and increase the urban warfare towards autumn and here we are exactly with that scenario taking place.”

Want to talk about how this weeks news affects you?

Get in Touch Today

If you wanted to talk about any of the news items we have shared this week and how it could affect you and your organisation, then get in touch with our teams today.

  • From time to time, we would like to contact you about our products and services, as well as other content that may be of interest to you. If you consent to us contacting you for this purpose, please tick below to say how you would like us to contact you:

  • You can unsubscribe from these communications at any time. For more information on how we use your data, please review our Privacy Policy.

    By clicking submit below, you consent to allow EIC to store and process the personal information submitted above to provide you the content requested.

Our offices will be closed for the Bank Holiday (Monday 29 August 2022).
If you have a query, please contact us from Tuesday 30 August onwards, and we
will be happy to deal with your query then.