European Energy Bills to Rise 54% From 2020 Level, BofA Says
(Bloomberg) -- Households in Europe are set to pay an average of 54% more for energy than they did two years ago, due to soaring natural gas and power prices across the region, according to Bank of America Corp.
The average residential consumer will spend 1,850 euros ($2,095) on energy this year, up from 1,200 euros in 2020, analysts at the bank said in a research note. The biggest increases will be in Italy and the U.K., where bills will jump by about 950 euros.
Europe’s energy crisis is hitting households, sending bills rocketing and pushing many into fuel poverty. Policymakers are under pressure to find ways to shield consumers while not sending energy suppliers into bankruptcy. Of the European Union’s 27 members, 20 have acted to soften the blow for the most vulnerable consumers and households -- most effectively via tax cuts, according to the European Commission.
“We see a return to early-2021 price levels as unlikely in 2022,” wrote the analysts, including Harry Wyburd and Karen Kostanian. Even if this were to occur, “it would likely be too late to avert significant cost increases which have already been locked in via hedging.”
Businesses are also set to be hit hard, with typical industrial consumers seeing an increase of as much as 70% in their electricity costs and 100% in their gas costs this year, according to Bank of America analysts. That follows a roughly 20% increase in electricity and 15% rise in gas costs in 2021, they said.
While gas and power prices have dropped from December’s record levels, the risk of high prices is far from over, with the likelihood increased by low gas storage in Europe. That could be a boost for utility companies, who are expected to see increased earnings but are also at risk of government interventions.
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