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Explainer: Bleak house: Why Europe faces steep winter energy bills

By Nina Chestney LONDON (Reuters) - Households across Europe face much higher winter energy bills due to a global surge in wholesale power and gas prices and consumer groups have...

By Nina Chestney

LONDON (Reuters) - Households across Europe face much higher winter energy bills due to a global surge in wholesale power and gas prices and consumer groups have warned the most vulnerable in the region could be hit by fuel poverty as a result.

WHY THE HIGH PRICES?

Energy companies pay a wholesale price to buy gas and electricity, which they then sell to consumers. As in any market, this can go up or down, driven by supply and demand.

Prices typically rise in response to more demand for heating and people turning lights on earlier in winter, while those in the summer period are usually lower.

But prices have sky-rocketed due to low gas storage stocks, high European Union carbon prices, low liquefied natural gas tanker deliveries due to higher demand from Asia, less gas supplies from Russia than usual, low renewable output and gas and nuclear maintenance outages.

Benchmark European gas prices at the Dutch TTF hub have risen by more than 250% since January, while benchmark German and French power contracts have both doubled.

HOW LONG COULD THIS LAST?

Europe's winter heating season typically begins in October and wholesale prices are not forecast to fall significantly during the remainder of this year.

Norway's Equinor expects the drivers of current high gas prices to remain during autumn and winter, its chief financial officer Ulrica Fearn said, adding that Europe's second largest gas supplier after Russia's Gazprom (MCX:GAZP) would ramp up gas production where it could to meet demand.

A rapid start-up of the Nord Stream 2 pipeline from Russia to Germany could help to balance high gas prices in Europe, a Russian Kremlin spokesman said.

Gazprom has finished construction, but will not start pumping gas to Europe until approval from a German regulator and commercial deliveries are not expected in the short term.

WHY RETAIL PRICE RISES?

Many energy suppliers announced hikes to retail tariffs in recent months, passing a higher wholesale cost on to consumers.

Wholesale costs can make up a large chunk of a bill. In Britain, for example, on a dual fuel bill (electricity and gas), the wholesale cost can account for 40% of the total.

So when wholesale market prices rise significantly, suppliers can hike consumer retail tariffs.

Graphic: What makes up a UK household dual fuel bill?: https://fingfx.thomsonreuters.com/gfx/ce/klpykerqqpg/Pasted%20image%201628230995436.png

Suppliers can buy energy in the wholesale market on the day of delivery, a day ahead and up to months or seasons in advance.

They have to try and predict when the price will be cheaper and buy the right amount to cover their customer needs.

If suppliers do not buy enough energy, they might have to buy more at a price which could be higher, depending on market movements. This year, prices have kept on climbing all summer.

CAN ANYONE INTERVENE?

Some governments have announced measures to try and ease the winter burden on households.

Spain's cabinet passed emergency measures on Tuesday to reduce energy bills by redirecting billions of euros in extraordinary profits from energy companies to consumers and capping increases in gas prices.

The government expects to channel some 2.6 billion euros from companies to consumers in the next six months.

Greece will offer subsidies to the majority of its households by the end of the year to make energy costs more affordable, a government official said on Tuesday.

Italy is looking to review the way electricity bills are calculated in an effort to curb prices, two sources said on Tuesday, with retail power prices set to rise by 40% in the next quarter.

In Germany, energy prices are being debated in the run-up to the Sept. 26 election. Britain introduced a price cap on the most widely used energy tariffs in 2019 aimed at ending what former Prime Minister Theresa May called "rip-off" pricing.

However, Britain's energy regulator Ofgem has raised the cap on the most widely used tariffs by 12-13% from October, after raising it in April due to high wholesale costs.

Ofgem says without this cap rise, companies would be unable to continue to supply energy to their customers and fulfil their wider obligations.

WHAT CAN CONSUMERS DO?

In countries with many energy suppliers, consumers are encouraged to switch providers or to a cheaper tariff.

Britain has around 50 suppliers due to a de-regulated market, but smaller ones have less capital to hedge their wholesale power purchases against soaring prices and some have gone bust in recent months.

Regulators such as Ofgem urge consumers to contact their energy provider if they are struggling to pay their bills to explain when and how much can be paid.

Energy efficiency measures, such as improved insulation, energy efficient lighting and smart meters are also advised, but could require upfront costs.

Reducing energy usage is much easier in the summer months.

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28-09-2021 01:57:12 (UTC+7)

EUR/USD

1.1703

-0.0011 (-0.10%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (5)

EUR/USD

1.1703

-0.0011 (-0.10%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

Indicators:

Buy (1)

Sell (5)

GBP/USD

1.3710

+0.0028 (+0.20%)

Summary

Sell

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (1)

Sell (5)

USD/JPY

110.99

+0.26 (+0.24%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (6)

Sell (0)

AUD/USD

0.7289

+0.0031 (+0.42%)

Summary

↑ Sell

Moving Avg:

Buy (2)

Sell (10)

Indicators:

Buy (2)

Sell (6)

USD/CAD

1.2621

-0.0032 (-0.25%)

Summary

↑ Buy

Moving Avg:

Buy (8)

Sell (4)

Indicators:

Buy (7)

Sell (1)

EUR/JPY

129.88

+0.17 (+0.13%)

Summary

Buy

Moving Avg:

Buy (7)

Sell (5)

Indicators:

Buy (4)

Sell (3)

EUR/CHF

1.0833

+0.0010 (+0.09%)

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Neutral

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Gold Futures

1,751.15

-0.55 (-0.03%)

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Sell

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Buy (3)

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Silver Futures

22.672

+0.247 (+1.10%)

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Sell (7)

Copper Futures

4.2855

0.0000 (0.00%)

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75.42

+1.44 (+1.95%)

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Neutral

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Brent Oil Futures

78.64

+1.41 (+1.83%)

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Neutral

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Natural Gas Futures

5.704

+0.504 (+9.69%)

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US Coffee C Futures

194.98

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↑ Buy

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Buy (12)

Sell (0)

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Buy (5)

Sell (0)

Euro Stoxx 50

4,165.48

+6.97 (+0.17%)

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↑ Sell

Moving Avg:

Buy (0)

Sell (12)

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Buy (0)

Sell (9)

S&P 500

4,450.70

-4.78 (-0.11%)

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↑ Sell

Moving Avg:

Buy (5)

Sell (7)

Indicators:

Buy (1)

Sell (9)

DAX

15,573.88

+42.13 (+0.27%)

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Moving Avg:

Buy (0)

Sell (12)

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Buy (0)

Sell (8)

FTSE 100

7,063.40

+11.92 (+0.17%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (1)

Sell (7)

Hang Seng

24,208.78

+16.62 (+0.07%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (8)

Sell (0)

US Small Cap 2000

2,294.35

+40.47 (+1.80%)

Summary

↑ Sell

Moving Avg:

Buy (4)

Sell (8)

Indicators:

Buy (0)

Sell (9)

IBEX 35

9,002.90

+129.80 (+1.46%)

Summary

Buy

Moving Avg:

Buy (7)

Sell (5)

Indicators:

Buy (4)

Sell (2)

BASF SE NA O.N.

64.740

+1.040 (+1.63%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (1)

Sell (5)

Bayer AG NA

47.47

+0.99 (+2.13%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (9)

Sell (0)

Allianz SE VNA O.N.

196.19

+3.85 (+2.00%)

Summary

↑ Buy

Moving Avg:

Buy (12)

Sell (0)

Indicators:

Buy (6)

Sell (2)

Adidas AG

278.80

-2.77 (-0.98%)

Summary

↑ Sell

Moving Avg:

Buy (0)

Sell (12)

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Buy (0)

Sell (10)

Deutsche Lufthansa AG

6.561

+0.328 (+5.26%)

Summary

↑ Buy

Moving Avg:

Buy (11)

Sell (1)

Indicators:

Buy (7)

Sell (2)

Siemens AG Class N

147.27

-0.84 (-0.57%)

Summary

↑ Sell

Moving Avg:

Buy (1)

Sell (11)

Indicators:

Buy (0)

Sell (10)

Deutsche Bank AG

11.120

+0.285 (+2.63%)

Summary

↑ Buy

Moving Avg:

Buy (10)

Sell (2)

Indicators:

Buy (5)

Sell (3)

    EUR/USD 1.1703 ↑ Sell  
    GBP/USD 1.3710 Sell  
    USD/JPY 110.99 ↑ Buy  
    AUD/USD 0.7289 ↑ Sell  
    USD/CAD 1.2621 ↑ Buy  
    EUR/JPY 129.88 Buy  
    EUR/CHF 1.0833 Neutral  
    Gold 1,751.15 Sell  
    Silver 22.672 ↑ Sell  
    Copper 4.2855 ↑ Buy  
    Crude Oil WTI 75.42 Neutral  
    Brent Oil 78.64 Neutral  
    Natural Gas 5.704 ↑ Buy  
    US Coffee C 194.98 ↑ Buy  
    Euro Stoxx 50 4,165.48 ↑ Sell  
    S&P 500 4,450.70 ↑ Sell  
    DAX 15,573.88 ↑ Sell  
    FTSE 100 7,063.40 ↑ Sell  
    Hang Seng 24,208.78 ↑ Buy  
    Small Cap 2000 2,294.35 ↑ Sell  
    IBEX 35 9,002.90 Buy  
    BASF 64.740 ↑ Sell  
    Bayer 47.47 ↑ Buy  
    Allianz 196.19 ↑ Buy  
    Adidas 278.80 ↑ Sell  
    Lufthansa 6.561 ↑ Buy  
    Siemens AG 147.27 ↑ Sell  
    Deutsche Bank AG 11.120 ↑ Buy  
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank5,665/ 5,715
(0/ 0) # 900
SJC HCM5,635/ 5,700
(0/ 0) # 885
SJC Hanoi5,635/ 5,702
(0/ 0) # 887
SJC Danang5,635/ 5,702
(0/ 0) # 887
SJC Nhatrang5,635/ 5,702
(0/ 0) # 887
SJC Cantho5,635/ 5,702
(0/ 0) # 887
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Sản phẩm Vùng 1 Vùng 2
RON 95-IV2204022480
RON 95-II,III2194022370
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DO 0.05S1658016910
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Dầu hỏa1564015950
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Ngoại tệMua vàoBán ra
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EUR25.993,7727.346,60
GBP30.324,2231.591,18
JPY200,45212,05
KRW16,7520,39
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