Energy price rises around Europe and what governments are doing about it

Today the Glasgow Times as part of our Beat the Squeeze series looks at the difference across Europe and the measures  other governments are taking to help people struggling with bills.

Households currently trying to cope with the April rise of an average of 54% are bracing themselves for yet more financial pain as the cap is to be raised again from £1971 to an average of £2800.

The reason given is the rise in wholesale gas on the international markets, which the UK relies on to produce electricity pushing prices to above what the energy supplier can sell it to customers at.

The cost of household gas and electricity varies around Europe and Britain has higher prices than most and has seen bigger increases recently.

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The price rises and the measures taken by governments vary across Europe.

According to international analysts Household Energy Price Index, the UK has the highest residential electricity prices per kilowatt, of 23 countries in Europe and is the fourth highest for gas.

It states there has been an electricity price rise in most countries but at vastly varying levels.

It ranges from 2% in Romania, 3% in Finland and 5% in Portugal to 54% in Austria. The UK was listed as 21%.

There was even a decline in the Netherlands, Spain and Greece mainly due to government reducing the taxes on household electric bills.

For gas the UK was fourth highest with only Netherlands, Austria and Sweden higher.

The Index noted the UK is reliant on gas and has low storage capacity to cope with rising wholesale prices.

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Sweden was higher because there are relatively few domestic gas customers, fewer than 100,000 making it more expensive and Austria was higher because it is more reliant on Russian gas with 80% of its gas imported for there.

The UK increase cannot be attributed directly to the war in Ukraine and reliance on Russian imports.

The UK Government said: “Unlike other countries in Europe, the UK is in no way dependent on Russian gas supply. Our single largest source of gas is from the UK Continental Shelf and the vast majority of imports come from reliable suppliers such as Norway.

“There are no gas pipelines directly linking the UK with Russia and imports from Russia made up less than 4% of total UK gas supply in 2021.”

The actions of governments to mitigate the impact on customers also varies across Europe.

The UK government has been challenged to do more to mitigate.

It said it has spent £9.1bn on the £200 loan and £150 council tax discount for the lowest bands.

Other countries have taken a different approach with tax cuts on energy bills and Vat cuts among some of the measures to reduce bills.

In France the state owns the biggest energy provider EDF and it will charge customers below the market rate at a cost of 8.4bn Euro. It has also cut taxes on electricity bills and given a 100Euro payment to more than 5million families.

In Germany measures worth £13bn have been applied including a one off 300Euro tax cut and discounted public transport as well as a cut in petrol duty. A green tax has also been cut to lower the increase to bills.

In the Netherlands, which is also reliant on gas, an energy tax cut is worth £330 a year to households.

In Spain 16bnEuros has been allocated, including subsidies for industries that are heavily dependent on energy and a fuel cut taking 9Euros off the cost of filling a car’s tank.

Italy is also using tax cuts on energy to lessen the impact on rising prices with 8bnEuros spent on packages to help people.

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The Government has also put in place a windfall tax on energy firm profits to raise 2bn Euros

In Sweden winter bill subsidies of up to 6000 kronor (£488) have been given to 1.8m households.

Households buy their gas and electricity from suppliers like the big six, Scottish Power, Scottish Gas, EDF, Eon, SSE and Npower.

They buy gas to sell on and to produce electricity from the global energy firms, who take it from under the ground and sea.

While dozens of small energy suppliers have gone bust in the UK and customers are unable to afford the price rises, leaving governments to mitigate rises, the energy producers are enjoying enormous rises in their profits.

BP and Shell are among the biggest suppliers of natural gas in the world.

BP, with its HQ in the UK, saw its profits more than double to £5bn in the first three months of this year.

Shell made £7.3bn in the first three months of the year, its highest ever and three times what it made in the same period in 2021.

ExxonMobil based in the USA made $8.9bn in the last quarter of 2021, it largest in seven years.

The rise in gas prices has been cited as the reason for the massive leap in energy giants’ profits

Scottish Power, headquartered in Glasgow, one of the biggest suppliers of household energy in the UK said its retail business is losing money as a result of the surge in wholesale prices.

Andrew Ward, CEO of Scottish Power Retail, said: “Right now the wholesale energy we buy for our customers on standard variable tariffs is costing us significantly more than the price cap allows.

“We want to make clear that our retail business is losing money during what is an incredibly difficult time for many of our customers.

“When the media talks about energy companies making large profits, they are referring to the oil and gas companies, not the retail energy suppliers such as Scottish Power.

There is no doubt the months ahead are going to be difficult for all and for some customers it is going to be unmanageable unless the government introduces significant measures to help.”