UK Utilities, Consumers Brace for Price Hikes

The British could see a sixfold increase in utility costs next year compared with 2011, according to Reuters calculations.

The hikes come from rising wholesale gas prices as well as a carbon price floor imposed by the government.

Steep wholesale gas prices are blamed for energy price increases being implemented in the next two months by Britain’s big power providers. Added to that, in 2013, prices in Britain will increase when tighter requirements under the EU Emissions Trading Scheme (ETS) kick in, along with a domestic tax.

In the early years of ETS, many of the EU’s 11,700 utilities and industrial firms took advantage of free permits if they exceeded the set caps. But in 2013, the companies will have to pay if they exceed carbon limits. This could cost cost companies up to 1.47 billion pounds in 2013 compared to 326 million pounds in 2011, according to research from Reuters.

Things will be even tougher for UK companies compared to their EU counterparts. From April 2013, UK generators will pay an additional fee based on a government price floor. Some of this expense will be passed on to consumers.

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