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Why have the UK energy price hikes been put on hold?

Major UK energy suppliers have reversed recently announced energy price hikes.

After proclaiming higher energy prices for the approaching winter, the UK’s “Big Six”  energy providers announced on 2 December that the increases will not be pursued.

UK energy prices driven by politics

Soaring energy costs and frustrated consumers became a political issue in September when Labour leader Ed Miliband said he would freeze consumer energy bills for 20 months if he wins the 2015 election. Sensing political vulnerability, the Cameron government decided to finance subsidies for Britons struggling with rising fuel bills through general taxation rather than charging energy providers. The government also said some green policy targets will be slowed down. Energy Secretary Ed Davey said he expected the average household energy bill to be £50 lower than it would otherwise have been next year.

In response to the government’s pledge to remove some taxes and social charges from energy bills – which the energy companies claim is a key cause of rising bills – the "Big Six" said they would pass on the savings to consumers and try to keep prices low until the next election. For example, Npower said it would not raise prices until spring 2015 unless wholesale costs went up, and EDF also indicated it would not raise prices again before 2015.

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