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UK households paying £1.1bn more for energy bills after Brexit

energy Cost of living crisis. Money on a home radiator heater. Rising cost of energy and bills
Post-Brexit energy power trade model adds £1.1bn to bills. Photo: Getty (Ink Drop)

UK consumers paid as much as £1.1bn more on energy last year after losing access to European Union internal markets.

Energy UK, which represents power generators and traders, said UK households were paying the price for “inefficient trading” arrangements since 2021, with electricity no longer exchanged through the EU market coupling regime.

Higher carbon prices in the UK's emissions trading market added an extra £700m onto consumer bills last year.

Bills were also boosted by as much as £370m due to post-Brexit trading arrangements, which mean interconnector power is bought and sold less efficiently.

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The situation is expected to be heightened as UK electricity exports increase due to the volume of offshore wind being built around the British Isles, the trade body warned.

The current regime may also hurt the UK’s transition to net-zero because it adds cost uncertainty to the deployment of renewable energy, the report said.

“Our analysis shows that increased energy and climate cooperation with the EU has the potential to deliver very substantial savings for households and businesses across the UK struggling with high energy bills,” Energy UK's deputy director Adam Berman said.

“Cooperation on energy and climate change issues is the low hanging fruit of the UK-EU trading relationship — there is no other area in which both sides have such closely aligned ambitions,” he added.

Read more: Energy bills rise to leave low income households £200 out of pocket

Before Brexit, the UK was part of the EU’s internal energy market regime, where a single price is created by automatically balancing the needs between countries. This is done via computer algorithms that match bids and offers.

However, since leaving the EU the UK has moved to a back-up system that involves running daily auctions, which is a costlier scheme given the added complexity.

UK households are currently paying record high prices for electricity and gas, even with government subsidies.

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