According to a report by University College London, the surge in wholesale prices for electricity last year caused UK consumers to spend more than twice as much on power as they did before the financial crisis.
The study reported that generators in Britain generated £49.5 billion ($61.7billion) in revenue in 2022. This compares to an average of £20.5billion in 2018 and 2019.
Around 70% of these extra tariffs were paid by gas-fired plants and renewable power companies. These are primarily run in the UK by SSE Plc. RWE AG. Scottish Power Ltd. Vitol Group’s VPI Power Ltd. and Uniper SE.
The report by Michael Grubb, professor at UCL Institute for Sustainable Resources (ISR) and one of its authors, said: “The explosion in costs for consumers over the past year highlights the need to detangle the UK electricity market from volatile fossil fuel prices.”
Persistent price inflation has now topped 10%. The figures show the UK’s historic cost of living crunch. The government’s energy subsidies have shielded some consumers, but households still pay record bills.
The revenue for gas-fired generation systems has more than tripled, to approximately £19 billion.
The study by Grubb and his co-authors, Paul Drummond, Serguey Maximov, and Philip McNally, found that even though the utilities’ fuel prices tracked the gas price increase, generators still benefitted because the price of electricity rose even more. The “spark-spread” – an indicator of profitability when burning gas to produce power – remained well above normal levels.