UK Gas crunch eases despite freeze but energy bills to rise

The UK is no longer in immediate danger of running out of gas but there are fears 20-year highs for wholesale costs could raise household bills.

National Grid said on Friday that it had withdrawn the country's first "gas deficit warning" since the winter storms of 2010.

It had issued the alert 24 hours earlier as the extreme weather combined with Storm Emma to bring horrific conditions to most parts of the UK on Thursday.

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The warning was essentially an appeal for fresh within-day supplies - which, according to energy data firm ICIS, helped tip wholesale costs to their highest level for 20 years at 350p per therm on Thursday afternoon.

Without those new supplies, factories could have been asked to scale back their work to ensure home heating and power was maintained.

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Experts believed that the surge in demand witnessed on Thursday would continue to ease into the weekend, though National Grid said it was not complacent.

"The 'gas deficit warning' issued yesterday (Thursday) was withdrawn at 4.45am this morning and we are currently not expecting to issue another today," it said.

"The market has continued to respond over the last 24 hours and we have seen an increase of supplies into the network.

"As the extremely cold weather continues we expect to see high demand on the gas network, so we are continuing to monitor developments closely.

"Protecting customer supplies is always our first priority and we would like to reassure them that this high demand has not affected their domestic gas supplies."

A lack of gas storage and pipeline disruption, especially in Norway, have hit imports and exacerbated the price spike - forcing extra costs on energy providers though most will have hedging strategies to limit the damage.

E.ON - one of the so-called "big six" household suppliers - became the first energy supplier to announce bill increases since the weather hit.

It said on Thursday night it was removing a number of discounts from April as part of industry efforts to make tariffs easier to understand though critics of the sector said it amounted to a rise in bills of between £20 and £50 annually.

Kevin Pratt, consumer affairs expert at the price comparison service MoneySuperMarket, said: "Energy bills will go up for many of its customers.

"With the UK in the grip of its most severe weather in decades, it's devastating news for customers who will see their prices jump from April onwards.

"Most importantly, customers on standard variable tariffs with E.ON or any supplier should be aware that, if they shop around, they'll probably find a fixed rate tariff that could save them a substantial amount each year - maybe £250 or more.

"That's a level of saving far beyond that promised by the forthcoming Government price cap."