Researchers at University College London believe that Brexit has already caused significant increases in the average UK customer’s energy bills. The researchers suggest the result of the Brexit referendum is directly responsible for rises of up to £75 per customer.
Various Connected Factors to Blame
Further examination of the published report highlights the individual reasons why prices have risen. The report identifies the collapse of the pound’s value as well as the volatility of wholesale energy prices. These main two issues have directly caused the rising price of the average customer’s energy bills.
However, the researchers also suggest that Brexit has been the major influence behind these two primary issues.
Wholesale Energy Price Rises
A spike in the volatility of wholesale energy prices led to an 18% increase in wholesale electricity prices. It also led to a 16% increase in wholesale gas prices. The latter is particularly significant as wholesale gas prices account for nearly 40% of UK customers’ total energy bills.
The report published by researchers at University College London (UCL) also includes a warning against a hard Brexit. Leaving the EU without a deal is likely to decrease the value of the pound even further. Estimations project it to lose 12% of its value against the euro. That would then lead to a total increase of £1.5 billion in the UK’s energy bills by the spring of 2020. Such an increase works out as an extra £61 per bill, on top of the £75 already mentioned.
Brexit Causing Exchange Rate Fluctuations
Dr Giorgio Castagneto is the Lead Author of the UCL Brexit energy price research. He said of the exchange rate fluctuations following the Brexit vote,
“We know that exchange rates fell after the EU referendum, but we can now look at the effect this had on wholesale and consumer energy prices. The exchange rate depreciation plus the fact that energy prices are now much more volatile means consumers have been paying more and are facing even higher bills over the next several months.”
Energy Experts Warn Against ‘No-Deal Brexit’
The UCL researchers are not the only ones concerned with a no-deal Brexit causing energy prices to rise even higher. Eurelectric is a sector association which represents the common interests of the electricity industry at a European level. They wrote to Prime Minister Theresa May to warn her that no deal would be very harmful.
It would not just be harmful for the UK power sectors either. A hard no-deal Brexit could have unfavourable consequences for the EU’s power sectors as well. It seems it really is in everyone’s best interests to secure a deal.
To learn more about different energy suppliers and tariffs available for you and your business, contact Business Save and their team of highly experienced energy experts.