Energy price cap September 2024
We all breathed a sigh of relief when Ofgem capped our electricity prices at around 22.36p per kWh back in July.
We weren’t so happy when we discovered that the standing charge was going up to 60.12p per day though.
Well, we don’t seem to be able to settle into any kind of budget this year as on September 30th electricity prices are set to rise again – just in time for the winter.
Yep, we are going to be paying at least 24.5p per kWh from 1st October.
But, what is causing this seemingly endless instability in our energy prices?
The simple, but strange, answer is gas.
Unlike Europe, the UK’s energy prices are determined by the most expensive way of generating electricity – and that is gas.
As all gas is traded on the open market, we can’t just produce it and keep it within the UK – the international market sets the price and all sellers must adhere to that price.
So, even though we extract at least 50% of the gas we need from the North Sea, that gas is still sold on the open market and is subject to international pricing.
Prices are affected by many things but the most prominent at the moment is the Ukrainian/Russian war in Europe.
Russia was supplying up to 40% of Europe’s gas, that has been reduced to just 8%, which means the prices has rocketed.
Add into that unrest in other gas producing countries, the aftereffects of the pandemic and the dwindling supply of the resource itself, and you have a perfect storm of increasing gas prices and, as a consequence, the cost of our electricity.
If only there was a natural, free and renewable resource that we could exploit to generate electricity … like the sun, for instance!
