Prime minister proposes revised energy price cap – and new oil and gas licensing round
More than 100 oil and gas licences could be awarded in the North Sea
THE PROPOSED energy price cap is set to be reduced to £2,500 for the “average UK household” following intervention from the government – while a new oil and gas licensing round in the North Sea is planned as early as next week.
New UK prime minister Liz Truss said on Thursday that the price guarantee will give “certainty on energy bills” for two years.
This is less than the previously proposed annual energy cap for an average UK household of £3,549, but it is still more than the current figure of £1,971.
The price cap, as set out in law, puts a maximum per unit price on energy that reflects what it costs to buy energy on the wholesale market and supply it to homes.
However the average price cap figures for the average UK household do not take into account regional variations for different parts of the country. The price cap does not limit a total bill, which will change depending on how much energy a person uses.
Meanwhile Truss said the government intends to accelerate all forms of domestic energy production – with more than 100 licences for oil and gas exploration in the North Sea likely to be awarded. Britain last awarded oil and gas licences in 2020.
The new prime minister said the government will also speed up deployment of clean and renewable technology including hydrogen, carbon capture and storage and wind – all forms of energy production being earmarked for Shetland.
The revised price cap will come into force on 1 October. A six-month scheme for businesses is also being proposed.
The House of Commons also heard that a fund is due to be set up to support those using heating oil.
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Truss said it comes in addition to a £400 energy bill discount previously announced by the UK Government.
She said she was against the idea of extending windfall taxes on energy suppliers – something which Labour leader Sir Keir Starmer said could pay for the new government support.
Responding to the news around the oil and gas licences, Friends of the Earth Scotland’s head of campaigns Mary Church said: “Burning oil and gas is driving the climate emergency that sees tens of millions displaced by floods in Pakistan and has brought extreme heatwaves and drought across the UK.
“The UK Government is denying the reality of climate change by encouraging companies to seek out more fuel for the fire that is engulfing the world.
“The Scottish Government must be willing to stand up to these reckless plans to expand fossil fuels and hand out more licences for oil and gas companies to explore and drill in the North Sea.
“Ministers at Holyrood must speak out and use all the tools at their disposal to block any plans to further lock us into the oil and gas that is driving both the climate and cost of living crises.”
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