Page 8 - Gi February 2019 - flipbook

NEWS | GOVERNMENT

Brexit added £2bn to UK energy bills

in year after referendum, report claims

BREXIT HAS ADDED
billions to the UK public’s
energy bills and leaving
without a deal could wreak
further havoc and cost
the average household an
extra £61 a year, according
to research by University
College London.
The 2016 referendum
has been the “principal
factor” driving up gas and
electricity bills over the
past two years, driven
largely by the collapse in
the value of the pound
and additional volatility
in wholesale prices, The
Independent reports.
As a result, households
paid an extra £75 each, on
average, in the year after
the vote following an 18
per cent rise in wholesale
electricity prices and a 16
per cent hike in gas.
The report, commissioned
by energy watchdog Ofgem,
sought to establish the
key drivers of energy price
increases in the UK and The 2016 vote had a significant
other European states effect on gas prices
between 2012 to 2017, and
found a spike in prices in the account for 39 per cent “The exchange rate to negotiate agreements
wake of the referendum. of the price paid by UK depreciation, plus the fact with EU member states
It warns that leaving consumers, so small that energy prices are now via the World Trade
without a deal is likely to fluctuations in price or much more volatile, means Organisation (WTO),
further deflate the value of the value of sterling can consumers have been would be a “real mistake”,
sterling, knocking around 12 add a significant amount paying more and are facing according to Energy Voice.
per cent of its value relative to import costs and even higher bills over the He said: “Falling back
to the euro, amounting to an consumer’s bills. next several months.” on WTO would be hugely
extra £1.5 billion in energy To offset some of the Meanwhile, Scotland’s damaging for the economy
bills by March 2020. uncertainty for consumers, Energy Minister Paul and the oil and gas sector
“Forecasts always carry the government introduced Wheelhouse has said a no within that. We think that
some uncertainty,” said co- legislation in July that deal Brexit scenario would would be a real mistake.
author Professor Michael allowed Ofgem to cap be “hugely damaging” to the “Many people don’t
Grubb from UCL’s Bartlett energy prices at around North Sea oil and gas sector. understand that it is a very
School of Environment, £1,136 a year – saving He condemned Theresa poor arrangement for trade
Energy & Resources. consumers around £75 a May’s decision before because we would be the
“But this research year on average. Christmas to postpone the only major economy in the
pinpoints historical fact: the Dr Giorgio Castagneto, “meaningful vote” in the world without a formal
referendum result, through the report’s lead author, House of Commons on the trade agreement with other
its impact on exchange said: “We know that government’s Brexit deal, major trading partners.
rates, has been the principal exchange rates fell after when the sector needs “This will have a profound
factor driving up UK the EU referendum but we “clarity”. impact on Scotland, which of
household energy prices can now look at the effect Mr Wheelhouse added course did not even vote for
over the past two years.” this had on wholesale and that a no deal scenario, leaving the EU, so it is even
Wholesale gas prices consumer energy prices. which would force the UK more acutely felt here.” ■

8

News.indd 3 17/01/2019 12:34