Heightened demand across Europe almost caused the outage, forcing the Electricity System Operator (ESO) to purchase emergency electricity from Belgium. This was paid for at a significantly inflated price. At its most, 5,000% over the usual rate, costing £9,724 per megawatt hour. This is the highest rate that the UK has paid. 

It’s important to note that the amount of electricity purchased at this record rate was minimal, being just enough to power eight homes for a year. However, it highlights the UK’s reliance on other nations for power, and the cost it can come at.

“We were bidding in a tight market and market prices were high that day because Europe also wanted the energy,” said a spokesperson for the National Grid ESO

“We managed the system and kept the electricity flowing to the South East.”

As well as the freakish heat, storms in Europe, as well as maintenance and outages of electrical infrastructure in the UK cause further supply issues, resulting in the last-minute power grab. The high price paid is likely to trickle down to energy customers as suppliers look to pass on costs. 

Unfortunately for households, this is the last of their concerns when it comes to energy bills. April’s record-breaking price cap increase saw gas and electricity costs rise by 54%, which was a record at the time. While there had been hopes the turmoil in the market would slow down, Russia’s invasion of Ukraine at the start of the year means that come October, another hike is almost certain. Current predictions for the Autumn price cap adjustment sit at £3,200, courtesy of industry experts Cornwall Insights. If Russia continues shutting off power supplies to Europe, this could rise as high as £3,850 at the start of next year.

While the government has laid out a series of financial support measures, it will not cover the next expected increase in energy bills. A recent report from the business and energy select committee warned that millions are being pushed into fuel poverty this winter. Among other suggestions, they urged the government to introduce a lower price cap threshold for vulnerable households.

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According to the business and energy select committee, millions risk being forced into ‘unimaginable debt’. The statement comes just weeks after predictions for October's price cap increase rose to £3,244.

The report highlighted that the government's £15bn package was made when the price cap was only projected to hit £2,800. With a higher rate almost certain, the committee insists that additional support be made available. 

One of the suggestions included was the introduction of a “social tariff” for vulnerable households. This would in effect create a separate, lower price cap for certain low-income customers. 

“Once again, the energy crisis is racing ahead of the government,” said Committee Chair and Labour MP, Darren Jones. “We were told by a number of witnesses, ‘If you think things are bad now, you’ve not seen anything yet.

“To prevent millions from dropping into unmanageable debt it's imperative that the support package is updated and implemented before October, when the squeeze will become a full-on throttling of household finances and further tip the economy towards recession."

Since late 2020, global energy prices have been climbing. Initially, this was due to increased demand in Asia and muted output in Europe. The UK suffered worse than most, in part because of its low storage capacity, which made it highly vulnerable to unfavourable market conditions. As the price cap prevented suppliers from passing costs onto consumers, many energy companies found themselves operating at significant losses. This led to 29 suppliers going under in 2021 alone. 

Ofgem was heavily criticised as a result. Many believed that the regulator allowed too many unsuitable entrants to the market in the name of increasing competition. The result was a catalogue of failed energy suppliers, which have created a multi-billion pound price tag for the taxpayer.

These perceived failings were included in the committee’s report, which said that: “Ofgem’s incompetence over many years enabled inadequately resourced and inexperienced founders to start energy companies.

“It failed to supervise regulated companies, which in turn took high-risk decisions including not hedging properly and using customers’ money to offer unsustainable prices that undercut well-run energy companies.” 

As well as trying to reduce bills in the short term, the report also stressed the need for long-term investment to improve the UK’s energy efficiency. One area requiring immediate attention was a nationwide insulation programme. 

Earlier this year, the UK was revealed to have the worst insulated homes in all of Europe. Improving this is therefore viewed both as a route to cheaper household bills but also a way of achieving the UK’s net-zero aspirations.

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The announcement was made on Wednesday and outlines an initial 15% reduction in overall gas consumption for all member states. While this will be voluntary at first, the EU does have the power to make it mandatory.

“Russia is blackmailing us. Russia is using energy as a weapon. And therefore, in any event, whether it’s a partial or major cutoff of Russian gas or total cutoff of Russian gas, Europe needs to be ready,” von der Leyen said.

Currently, Kremlin-backed Gazprom supplies around 40% of Europe’s natural gas. Since the invasion of Ukraine, the viability of this relationship has been called into question.

Last week, the Nord Stream 1 pipeline’s output was reduced to 40% due to alleged maintenance works. Previously, the Kremlin has refused to supply some European nations if they did not pay in roubles, which would have undermined ongoing sanctions.

While the UK only imports around 4% of its natural gas from Russia, the interconnected nature of global energy markets means that supply shortages in Europe cause domestic price fluctuations. The government has therefore been taking measures to improve the UK’s energy security. Renewable sources have been touted as a cheap way to achieve this, while still staying in line with its net-zero aspirations.

However, the more short-term issue is keeping lights on and ovens warm over the winter. Supplies were short and prices high even before the war in Ukraine, with the prospect of further disruption increasing the chances of severe shortages across Europe over the Winter. On Thursday, The Lords economic affairs committee urged the government to agree on provisions with the EU to prevent this, should Russia choose to step up their restrictions.

“This is something we need to grip urgently,” said Lord George Bridges, chair of the committee in an interview with the Financial Times.

“What was seen to be very unlikely but a few months ago is now seeming more likely, and therefore we have to have a plan.”

For UK energy customers, this uncertainty is what is largely fuelling projections for a further price cap increase in October. According to industry experts Cornwall Insights, Autumn will see household energy bills rise to around £3200. 

While the government announced a range of financial support measures - the first of which is being made by the end of July - many households still face a difficult winter.

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Initially, the government proposed two separate payments to the public. The first was a £150 council tax rebate, with the second being a £200 loan to mitigate energy costs. The latter would be paid back through bills over the next few years. However, after some pressure, they were replaced with a more substantial package, with no repayment

This was announced towards the end of May by Rishi Sunak. On a base level, all domestic energy customers would receive £400 for their gas and electricity bills. 

On top of this is a £650 one-off payment for low-income families, with around eight million households eligible. The first half of these payments started landing in accounts on the 14th of July, with the final ones being made by the end of the month. The second half will arrive made in Autumn to coincide with colder weather, as energy usage starts to go up. 

“It’s great that millions of the families who are most in need are starting to receive their Cost of Living Payments, which I know will be a massive help for people who are struggling,” said Chancellor of the Exchequer, Nadhim Zahawi.

“Alongside tax cuts, changes to Universal Credit and the Household Support Fund, these payments are a vital part of our £37 billion support package to help people deal with rising prices.” 

Unfortunately, October is also set to bring an increase in the price cap. April saw a 54% rise, which has been the leading cause of the current 9.4% inflation rate. According to recent projections, a similar level hike is expected the next time Ofgem reviews the cap in Autumn. The prediction, made by industry experts Cornwall Insights, would leave the average UK household paying around £3,200 per year for their gas and electricity bills.

For those on disability benefits, more targeted support is available in the form of one-off payments of £150. Similarly, pensioners who are receiving winter fuel payments will receive £300.

To find out if you are eligible for any form of government support, check out the government website for more information.

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The bank, which is the UK’s second-largest with 26million customers, also revealed that 80% of current account holders had less than £500 to their name. Perhaps unsurprisingly, 75% expressed some kind of concern about the current cost of living crisis and how it would impact them. 

Speaking with the BBC, Lloyds chief executive Charlie Nunn said: “Customers are concerned, and they should be. We have seen some areas where there’s real points of challenge.

“About 80% of individuals and UK customers and families have less than £500 worth of savings in their current account and their savings account. They might have money elsewhere but what we can see is less than £500.”

Despite recognising that there were serious issues, Nunn also suggested that people were being too negative, which could in turn have worse implications for the economy.

“We are concerned that I think we collectively are talking ourselves into the risk of too negative an outlook,” he said.

“There are pockets of strength in the economy. There are significant parts of the consumers in the UK who have strength and really want to spend and create that demand and we can continue to see opportunities to invest in growth.”

However, the struggle facing many households - especially low-income families - is impossible to ignore. Lloyds found that 20% of their customers had been forced to cut back on costs in order to afford necessities. 

Similar research, this time from Which? paints a similar picture. In a survey, the consumer group found that two-thirds of their low-income customers had been forced to make at least one significant financial adjustment in the last month to cover expenses.

The UK is currently in the throes of a cost of living crisis which is being described by many as the worst generation. With inflation at 9.1%, its highest level since 1981, it’s not hard to see why. 

While there are multiple causes of this, the largest by far is rising energy bills. April saw the price cap - a figure set by Ofgem which limits how much companies can charge customers - increase by 54%. A similar hike is expected in October, which would leave households with average gas and electricity expenses of £3000 per year.

The government has announced a range of support measures in response to this. these come in the form of a one-off £450 payment for all domestic energy customers, with more targeted support for vulnerable and low-income households.

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While most of the providers were found to have some failings, the regulator named five which were seen to have ‘moderate to severe weaknesses’. These include ‘inadequately documented or embedded processes, weak governance and controls, to an overall lack of a structured approach to setting customer direct debits’. Providers who have fallen short of Ofgem’s standards were told that they needed to do the following within the next two weeks.

• Review accounts of customers whose bills have increased by 100% or more

• Reimburse customers who have been overcharged and offering goodwill payments were appropriate

• Examine any process issues which lead to incorrect payments

• Submit a plan of how to address and fix any problems found during the review

The regulator has warned that failure to handle these problems will result in punitive measures. These could include fines or an order banning them from taking on any new customers.

“We know how hard it is for energy customers at the moment, so it’s crucial that the amount they pay each month in direct debits is right so they can manage their money,” Ofgem’s chief executive, Jonathan Brearley, said.

“Suppliers must do all they can, especially during the current gas crisis, to support customers and to recognise the significant worry and concern increased direct debits can cause.

“We know there is some excellent service out there, but we want to make sure that it’s consistent and standard across the board. It’s clear from today’s findings on direct debits that there are areas of the market where customers are simply not getting the service they need and rightly expect in these very difficult times.”

The energy market has been in turmoil for the last three years. Price started to rise towards the end of 2019, as heightened demand in Asian countries emerging from lockdown was met with muted output in Europe. In the UK, the price cap - which limits how much providers can charge - meant that many energy companies were operating at significant losses. This meant that in 2021 alone, nearly 30 providers went out of business. 

However, the price cap was hiked significantly in April to accommodate the market conditions. This resulted in a 54% increase, bringing average household energy bills to nearly £2,000 a year. While there had been some hope that winter would bring respite, a recent report from Cornwall Insights warned that bills could exceed £3000 when the price cap is next adjusted in October.

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The energy consultancy firm had recently projected that bills would rise to £3,000 in the Autumn. However, a new prediction made on the 8th of July puts the final figure at £3,244. Unfortunately, April 2023’s adjustment does not appear to hold any respite either, with a slight increase to £3,363 forecast. While Cornwall Insights conceded that much could change in the coming months, some price hikes appear inevitable.

"There is always some hope that the market will stabilise and retreat in time for the setting of the January cap,” said Dr Craig Lowrey, a principal consultant at Cornwall Insight.

"However, with the announcement of the October cap only a month away, the high wholesale prices are already being “baked in” to the figure, with little hope of relief from the predicted high energy bills."

“As the energy market continues to grapple with global political and economic uncertainty, the corresponding high wholesale prices, and the UK’s continued reliance on energy imports has once again seen predictions for the domestic consumer default tariff cap to rise to what are even more unaffordable levels.”

Energy prices started rising significantly towards the back end of 2020. This predominantly due to muted wind output in Europe and several Asian nations' increased demand as they came out of lockdown. The issue in the UK was exacerbated by poor domestic output coupled with low storage capacity, meaning that Britain was especially vulnerable to the increasingly hostile market conditions.

As wholesale prices rose, numerous energy companies, unable to pass costs onto customers due to the price cap, began to go under. 2021 alone claimed nearly 30 casualties. The largest of these was Bulb, which, due to its size, was placed into special administration by the government.

However, when April hit, Ofgem increased the price cap by 54%. This means that the average UK household is paying nearly £2,000 a year for their gas and electricity. Unfortunately for Brits, the hike in bills isn’t the only thing costing them more, as petrol, groceries and rental prices all climb.

To mitigate this, the government recently announced a range of emergency measures. These come into effect this weak and include one-off payments of £650 to all domestic energy customers, as well as additional support to lower-income and vulnerable households.

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In a world-first, researchers from Finland recently developed a sand battery prototype which can efficiently store heat for months. It uses cheap renewable energy to charge the battery, bringing tonnes of low-grade sand to around 500C. This in turn generates warm air, which is used to heat buildings.

While the issue of cheap, renewable energy has been growing for a while, its importance has grown in the past couple of years. Increased climate change concerns, combined with the rising cost of natural gas has governments scrambling to find solutions. The issue has become more acute since Russia invaded Ukraine. As Russia provides a large amount of Europe’s energy, fears of supply chain disruption and threats from the Kremlin to limit output have caused significant price fluctuations.

Finland is especially vulnerable to these risks. Not only because it sources the majority of its energy from Russia, but also because of the energy-intensive nature of its long and cold winters. It’s perhaps unsurprising then that Finnish engineers have potentially come up with a solution. 

Speaking to the Mail Online, co-founder of Polar Night Energy Marku Ylonen said: "The transition to green energy leads to huge variation in available electricity, leading to mismatch in production and consumption.

"The mismatch can at times be large; we might have tens of GW’s worth of non-usable electricity. 

"Our heat battery can provide a low-cost sink for huge amounts of energy, stored as heat at high temperature, and it can maintain it in useful form for industry, district heating, or later also for electricity generation. 

"The key benefit is really the scale we can offer for storage, we can store tens of GWh’s worth of energy with reasonable costs and without significant degradation of the system over time."

With energy costs on the rise, these sorts of innovations cannot come soon enough. April saw a 54% increase in the price cap - the figure set by Ofgem which limits how much energy suppliers can charge customers. This means that households are paying nearly £2000 per year for gas and electricity. There are further concerns that the next price cap adjustment in October could bring bills as high as £3000.

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The survey, conducted by the Joseph Rowntree Foundation shows that one in ten low-income households (defined by earning £25,000 or less per year) have turned to credit to cover bills over the past 12 months. In 2022 alone, those on low incomes added £12.5bn of fresh debt, with the final figure now totalling £22bn. Unfortunatley, this growth does not appear to show any sign of slowing.

“What we’ve also seen is that 870,000 households are planning on doing that in the coming months,” said Rachel Earwaker, senior economist at the Joseph Rowntree Foundaiton.

“I think that gives you an indication of what is to come. We’re now seeing some of the impact of high prices but a lot of that won’t have kicked in yet, so I think it absolutely will get worse before it gets better.”

JRF’s study coincides fittingly with a return to the market for Amigo, who were recently forced to compensate customers for selling unaffordable loans. Under the new name ‘Rewardgate’ they will be offering a range of products, including personal loans with a 49.9% annual APR. While this might sound excessive, it falls within the limits of what the Financial Conduct Authority (FCA). Some regulated lenders have loans with APR’s in excess of 1,200%.

With the cost of living crisis continuing, concerns will only grow that many households will be forced into riskier financial situaitons. Many loans come with eye-watering late fees, which become worse if and when and if they are passed onto a debt management company. Similarly, those with bad credit scores may find themselves borrowing from illegal sources. JRF’s research showed that over two million households are in debt to loan sharks.

Inflation is currently at 9%, it’s highest figure since the 1981. While this is being largely driven April’s 54% increase in energy prices, Brits are also finding themselves paying more in other areas including supermarkets and for petrol. Chancellor Rishi Sunak has announced a range support measures, with a focus on particularly vulnerable households. However, Katie Schumaker, principal policy advisor as JRF does not believe it goes far enough.

“Families up and down the country have been faced with options that are simple but grim – fall behind on bills, go without essentials like enough food, or take on expensive debt at high interest. In some cases they had to do all three,” she said.

“No one should be put in this precarious position. The hardship families are facing now builds on the foundations of a decade of cuts and freezes to social security. 

“The Chancellor’s cost of living support package will offer some temporary relief, but rather than lurching from emergency to emergency government must get ahead of this problem.”

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