Energy price guarantee could cost taxpayer £140bn in ‘extreme’ scenario, market expert warns
The taxpayer support for household energy bills could cost up to £140bn in an “extreme” scenario, an energy market expert has warned.
Cornwall Insight, which became a prominent voice in predicting levels for the energy price cap before it was replaced by the government’s energy price guarantee (EPG) this month, said its findings showed a near doubling of the forecasts between the best and worst cases.
The energy price guarantee limits the amount you can be charged per unit of gas or electricity to help ease the damage to family finances caused by the wider cost of living crisis.
It means that the taxpayer will pay the difference between the set unit cost and any higher unit cost.
The scheme shields households from the worst of the scary wholesale costs in the market, largely caused by Russia’s war in Ukraine, for the next two years.
The guarantee, the government said, should mean the average annual bill remains below £2,000 a year as it is supported by the £400 grant for every household and the temporary removal of green levies from bills.
Crucially, the size of a bill will depend on the amount of energy used as the scheme covers the cost of a unit. It does not cap the amount you will pay overall.
Cornwall Insight put the range of the total cost of the EPG at between £70bn and £140bn for the two years – equivalent, at the lower end, to the cost of the COVID furlough scheme.
Please use Chrome browser for a more accessible video player
How to save money on energy bills
Chief executive Gareth Miller said of the gulf: “This reflects a febrile wholesale market continuing to be beset by geopolitical instability, sensitivity to demand, weather, and infrastructure resilience.
“The risk around these factors grows in the second year of the scheme as uncertainty increases with time.
“No one is clear on what the single curve of prices will be, so the government will find it hard to accurately plan for how to cover the EPG expenditure.
“Fortune befriends the bold, but it also favours the prepared. The large uncertainties around commodity markets over the next two years means that the government could get lucky with costs coming out at the low end of the range, but the opposite could also be true.
Please use Chrome browser for a more accessible video player
Risk of emergency gas shortage
“In each case, the government may find itself passengers to circumstances outside its control, having made policy that is a hostage to surprises, events and volatile factors. That’s a difficult position to be in.
“The good news is that there is a route through this. The government could use the next few months to develop more targeted energy support policies for households, building on proposals brought forward during the late summer across industry actors and think tanks.”
It delivered its report as the chancellor comes under intense pressure to change course after his mini-budget spooked financial markets.
The chief concern was over the level of borrowing that would be required to fund the growth plan.
There has yet to be independent scrutiny of the forecasts as the Office for Budget Responsibility was not required to deliver its verdict at the time of the mini-budget.
Then, Kwasi Kwarteng put the cost of his tax-cutting agenda – since slimmed by £2bn because of the U-turn on abolishing the top rate of income tax – at £45bn.
The cost of energy aid packages for households and businesses would come to around £60bn over the first six months, he suggested, adding that the sum came with a big health warning because the wholesale price environment remained volatile.
UK
Family of nine-year-old Aria Thorpe pay tribute to ‘beautiful soul’ as teen appears in court charged with murder
The family of a nine-year-old girl stabbed to death have said she was a “beautiful soul” who was brave, kind-hearted and “always put a smile on people’s faces”.
Police were called to Lime Close in Weston-super-Mare, Somerset, just before 6.10pm on Monday, where Aria Thorpe had suffered a single stab wound.
The child was pronounced dead at the scene.
In a tribute released by Avon and Somerset Police on Friday, the girl’s family on her mother’s side said: “For those who didn’t have the privilege of knowing Aria, she was the most beautiful little soul – happy-go-lucky, full of light, and joy.
“She loved to sing and dance, and she took such pride in dressing up, always wanting to look just like her mummy.”
Tom Thorpe, the girl’s father, said: “It’s hard to put into words how devastating it is, our little Aria, that you’re up there with the angels looking over us.”
It comes as a 15-year-old boy charged with Aria’s murder appeared in court.
Pic: Avon and Somerset Police
Aria was a ‘precious girl’
In their statement, Aria’s family on her mother’s side said her death “has devastated us beyond words”.
“Our hearts are broken in a way we never imagined possible,” they added.
“As a family, we are holding one another close and doing everything we can to support each other through this unimaginable time.”
They said they were “truly touched by the lovely messages we have received”, before asking “that our privacy is respected, as we try to come to terms with the terrible loss of our precious girl”.
Flowers laid in memory of the young girl
‘Wacky ways and outright madness’
Mr Thorpe said: “How sad it’s going to be not hearing ‘Dad, how long left?’ on our long journeys back and forth at weekends.
He then said that Aria was “such a brave, kind-hearted and a beautiful innocent soul”, and “always put a smile on people’s faces with your wacky ways and just outright madness”.
Mr Thorpe added: “Your other little family down here in Portsmouth will forever miss you.
“We’ll miss you begging to go outside, even in the pouring rain just to have as much fun as possible in the little time we had at weekends.
“You will be greatly missed, you special little angel. A life gone far too early but I hope a life lived well. We all love you dearly. Goodnight darling.”
Teenager in court
Meanwhile, a 15-year-old boy charged with Aria’s murder appeared at Bristol Crown Court on Friday, where he was remanded.
The teenager, who cannot be named because of his age, was arrested in the Somerset village of Worle at 6.19pm on Monday.
He is next due in court on 16 March 2026. Appearing via video link from youth detention accommodation, he spoke only to confirm his name.
Judge Peter Blair KC set a provisional trial date for 15 June during the hearing.
A teenager charged with the murder of nine-year-old Aria Thorpe will stand trial in June next year.
The 15-year-old boy, who cannot be named because of his age, appeared at Bristol Crown Court on Friday.
The defendant, who appeared via video link from youth detention accommodation, spoke only to confirm his name.
During a brief hearing, Judge Peter Blair KC, the Recorder of Bristol, set a provisional trial date for 15 June 2026.
The trial is expected to last two weeks.
Avon and Somerset Police were called to Lime Close in Weston-super-Mare just before 6.10pm on Monday, where nine-year-old Aria had suffered a single stab wound.
Flowers laid in memory of the young girl
The boy was arrested in nearby Worle a short time later.
His father was among those attending in the public gallery.
The teenager is next expected to appear in court on 16 March.
-
Sports2 years agoStory injured on diving stop, exits Red Sox game
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports3 years agoButton battles heat exhaustion in NASCAR debut
-
Sports3 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment3 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment1 year agoHere are the best electric bikes you can buy at every price level in October 2024