By Susanna Twidale

LONDON (Reuters), Despite spending tens to billions to protect consumers and their rights from the wrath of voters, European governments appear to have failed to make a dent in record-high energy prices.

Legislators from Athens and Oslo have taken a variety of initiatives to help the poorest households, including removing VAT from home energy bills, or offering targeted assistance for them.

However, these measures pale in comparison to a 330% increase in benchmark European gas prices over the past year. The reason for this is because of the slow transfer prices from wholesale markets onto consumer utility bill prices.

Harry Wyburd (NYSE:) Securities European utilities analyst, stated that the measures announced in Western Europe so far will not cover approximately a quarter of price increases on average.

BofA analysts project that the average household in western Europe will spend around 1,200 euro ($1,370) per year on electricity and gas by 2020. According to wholesale prices they expect this amount will rise 54% to 1,850 Euros.

High prices are due to low gas supply from Russia and lower storage levels. Most energy suppliers purchase power or gas about 6-9 months ahead of customers.

According to Wyburd, the price of switching on your kettle today is calculated based on what gas or electricity cost was an average 6-9 month ago. Wyburd described it as if the whole thing is moving slowly.

Average annual energy bill increase per household euros per year 2022 v 2020 https://fingfx.thomsonreuters.com/gfx/ce/zgpomazkdpd/Pasted%20image%201642004029958.png

‘EXPLOSIVE’

Politicians were reminded by violent protests in Kazakhstan about rising car fuel prices that they can trigger anger among voters.

France’s Economy Minister Bruno Le Maire cited the recent events in Kazakhstan to explain why his government is taking steps to protect households from rising prices. This includes capitulating at 4% the increase in electricity costs.

French lawmakers are very wary of repeating 2018’s violence-filled street protests in protest of an increase fuel tax, which turned into bigger protests of authorities.

In France, polls consistently show that purchasing power was the top issue among voters. OpinionWay-Kea’s poll revealed that 57% of French voters considered purchasing power more important than other issues on January 18. This was ahead of immigration, social security and unemployment. The figure had been 51% two weeks prior.

Nicolas Goldberg (Colombus Consulting Energy Specialist) stated that electricity prices were an explosive topic and political object.

Italy, which spent more than 8 Billion euros to reduce retail energy bills hikes last July, was among the first European nations to take action. Rome may also increase taxes on energy businesses that have received higher prices.

However, household electricity prices should rise to more than 50% by 2022’s first quarter and gas will increase to more than 40% in the second quarter of 2022 according Italian energy watchdog ARERA.

Other countries have had to increase their measures. Spain has already extended several tax cuts. It originally planned to keep the rates lower until 2021 but decided in December to increase them until 2022.

Fuel poverty

Britain’s price caps, which were introduced in 2019, will be lifted in April. This is one month before May local elections. Millions of homes in Britain are likely to see an increase of about 50% in their gas and electricity bills.

Robert Buckley of Cornwall Insights said, “The government finds itself in the position where it has been given some time by the cap, but figures required to completely limit the increase would be massive.”

Recent polling in North England showed that energy bills were an important topic for 80% of the voters who voted in support of the government. This was the area where Boris Johnson, Prime Minister, won the seats at the last election.

Analysis of the Survey by Energy and Utilities Alliance, a non-profit trade organization, revealed that 17 out of 18 seats in the area’s parliamentary wards would be returned to Labour Party if there was an election.

Britain should do more to help consumers and energy providers.

Charity National Energy Action stated that higher fuel prices would likely cause 1.5 million additional households to fall into fuel poverty. That means they won’t be able to heat their homes as needed.

This would increase the fuel poverty rate in Britain to 6,000,000, or more than one fifth of households.

The spokesperson for the British government stated that the cap protects millions of people from high-priced goods and programs are being implemented to assist vulnerable families.

The spokesperson stated that “we’ll continue listening to consumers and business on how to manage energy costs,”

($1 = 0.8762 euros)