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Will Brexit affect your energy bill?

Find out whether you will pay more for energy after Brexit

Will Brexit affect your energy bill?

We’ve spoken to energy experts and the Big Six energy firms to understand what Brexit will mean for your energy bills.

The average household energy bill in the UK in 2016 was £1,066, so it’s no surprise that many of us are worried about energy prices rising after Brexit.

We decided to investigate what impact Brexit may have on how much you pay for your gas and electricity. Keep reading to find out all you need to know about Brexit and your energy bill.

Worried about how much you’re spending on energy? Use our free switching service, Which? Switch, to compare gas and electricity prices and find the best deal. If you prefer to call, you can phone Which? Switch on 0800 410 1149 or 01259 220235.

Energy bills after Brexit

There are many factors that affect our energy prices, so it’s important to first understand how the energy industry works in the UK.

Energy policy

The UK’s energy policy is mainly determined at a domestic level. The EU sets standards to stop member states polluting Europe’s environment, but each state can choose its energy mix within that. So, as an example, while Germany wants to ditch nuclear, our government’s planning to revive it with the construction of Hinkley Point C in Somerset.

Energy improvements

A chunk of our energy bills currently goes towards funding energy improvements. There’s nothing to indicate that the UK’s green energy targets will be scrapped due to Brexit, or that the part of your bill that goes towards funding improvements will be decreased.

However, leaving the EU could release us from certain EU energy goals, once we’ve disentangled them from our own and established a new energy trading relationship with Europe.

But independent analysts Vivid Economics and Cornwall, both investigating the likely consequences of Brexit, believe the government’s focus on the energy ‘trilemma’ (the sometimes clashing aims of securing supplies, decarbonising our energy industry and providing affordable energy) will remain. And the uncertainty surrounding Brexit could make tackling these more expensive for all of us.

Energy investment in the UK

To support energy supplies in the UK, an extensive program of nuclear, renewables and energy-efficiency drives is planned. But Vivid Economics and Cornwall both fear that we will struggle to attract the investors we need for these low-carbon initiatives.

Investors will expect higher returns to compensate them for the financial risk. The weak exchange rate isn’t helping, hiking up the costs of imported equipment and services.

So there’s certainly a chance that the increased cost will push up bills, as Cornwall says, by ‘flowing through to consumers via the government’s policy programmes’.

In essence, our energy bills could increase because of Brexit. We think the government must ensure that any impact on energy prices is a key consideration, both during and after the Brexit negotiations.

What the Big Six say about Brexit

We asked each of the Big Six energy firms how Brexit would affect them and our bills:

  • British Gas parent company Centrica said it was focused on ‘delivering’ for customers and shareholders, understanding the impact on energy regulations and markets, and helping the government reach ‘the best possible outcome for energy’. It also said: ‘The UK is a major energy importer and what happens in the EU energy market will ultimately impact UK consumers.’
  • EDF Energy said it was too early to gauge the impact of Brexit on the energy sector. It said that it would continue to concentrate on serving customers and ‘running power stations safely and reliably’. It added that the sterling slump ‘has led to higher costs for imported coal and gas, which in turn impacts UK energy wholesale prices’. It hopes that we maintain an ‘outward-looking economy’ and continue to champion climate change action, to trade energy across borders, and to support investment in infrastructure, research and development.
  • Eon said ‘the consequences of Brexit will be manageable due to the way we run our business within the UK’. It added that, as a ‘truly international organisation’, it sees cross-border co-operation as ‘beneficial’.
  • Scottish Power said that it ‘respected’ the referendum result and was committed to prioritising customers, maintaining UK investments, upgrading its networks and constructing renewable energy generation.
  • SSE didn’t believe that its customer service or investments were threatened by the vote to leave the EU. It said that the ‘challenge’ would be ensuring that any changes to the EU/UK energy relationship were ‘consistent with providing reliable and affordable energy’.
  • Npower said it was unable to comment.

Brexit and the Big Six

Energy expert professor Stephen Thomas (emeritus professor of energy policy, University of Greenwich Business School) told us that the Big Six will be less affected by Brexit than you might expect. They’re better able than small suppliers to absorb fluctuating wholesale prices and exchange rates, he says.

Only British Gas and SSE are UK-owned (Npower and Eon are German, EDF is French, and Scottish Power is owned by Spanish firm Iberdrola). Thomas says the remaining four are much more affected by developments back home than by Britain leaving Europe – renewable energy costs in Germany eroding profits for Npower and Eon, for example.

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