Energy Bills per UK Household to Reach 6.9 Million Won Annually Next Year

From 1,277 Pounds Annually in October Last Year to 4,279 Pounds Annually in January Next Year
UK Government to Levy Windfall Tax on Energy Companies from Next Year Until 2028

[Image source=Pixabay]

[Asia Economy Reporter Yoon Seul-gi] Household energy bills in the UK are set to rise to ?4,279 (approximately 6.9 million KRW) annually in January next year, more than tripling from ?1,277 in October last year.

The UK energy regulator Ofgem recently announced that the standard household energy bill for January to March next year will be ?4,279. This is 21% higher than the current ?3,549 (approximately 5.71 million KRW). Despite government support, the current household energy cost burden is double that of last winter (?1,277). Previously, the government set an annual price cap of ?2,500 for household energy starting in October last year and has been covering the difference through the budget.

According to foreign media including Bloomberg, the think tank Resolution Foundation analyzed that the government's energy bill support for the three months early next year will amount to ?16 billion (approximately 25.8 trillion KRW). Energy market research firm Cornwall Insights forecast that government energy cost support over the next 18 months will reach between ?38 billion and ?42 billion.

Amid this situation, as the UK government moves to cut public spending, the perceived household cost burden is expected to increase further. The UK Treasury announced a budget plan to extend household energy cost support for one year but reduce its scale. From April next year, additional household energy bill support will be provided for one year, but the cap will rise to ?3,000 annually. Also, the ?400 fuel discount support, which was applied to all households for six months to reduce household burdens, will be discontinued.

Since the beginning of this year, Europe has faced an energy crisis due to the Russia-Ukraine war, causing energy prices to soar. In response, European countries plan to impose windfall taxes (excess profit taxes) on energy companies that have made astronomical profits from rising energy prices. The additional tax revenue from the windfall tax will be used to strengthen financial support for vulnerable groups.

The UK government will also temporarily impose a windfall tax on energy companies from next year until March 2028. On the 17th, UK Chancellor Jeremy Hunt announced that the tax rate on energy companies such as electricity and gas providers will increase from 25% to 35%, and power generation companies will be newly taxed at 45% of their profits.