Energy Prices Rise Dramatically!

As the recent news of energy costs rising has have been all over the press and news/current affair/money programmes these last few weeks you will no doubt be more than aware that currently as an energy consumer unless your energy supply is currently on a fixed tariff, your energy costs will now be much more expensive.    In fact, according to a leading charity more than a million extra British households won’t be able to afford to heat and power their homes next spring.  This is worrying news to all consumers and we have had a lot of information and advice threw at us very quickly.  This can add to our worry.  So let’s dissect some of the info available and discover what’s best to do, and who can help during these difficult times.

How and Why Has This Happened?

There is a crisis within the ever-rising energy costs. It is reported that as the economy rebounded from the pandemic, energy supplies dried up.  This was due to a mixture of a cold winter last year that left stocks in Europe unusually low, while Russian pipeline gas supplies have also been lower than expected.  Asia also suffered a cold winter, so has been competing to import liquefied natural gas.  Therefore this dramatically increased demand, which has, in turn, pushed prices up, not just in the UK but across Europe and Asia.

This has led to numerous energy firms crashing out of business since the beginning of September to date.  At the time of going to press SKY news had reported of another 4 suppliers have indicated to OFGEM they can no longer trade for more than a week – although these companies had not yet been named or any official statement received.  However, the crisis for smaller energy firms shows no sign of letting up in the immediate future

Energy Firms Going Bust

What Has This Meant in Real Terms to the Consumer?

From 1 October, OFGEM increased the energy price cap by £139 a year. This increase will affect 15 million consumers across the UK.  The energy price cap limits how much suppliers can charge domestic customers for gas and electricity. The next revision to the energy price cap will be decided by OFGEM in February but will come into force in April.  Analysts have stated that the cap could go up by £400 meaning that a household with typical energy use would pay around £1,660 a year.

At the start of October the energy price cap, which limits costs of rising energy prices on households in England, Scotland and Wales, was raised to take the sharply rising wholesale gas price into account. But OFGEM, the energy regulator, said the price cap would have to rise again next year if wholesale gas prices continue to go up. Analysts said this could mean a typical customer paying between £400 and £600 more per year. Until recently, the energy price cap was a backstop, protecting the vulnerable. Now it is the most competitive tariff available. The cap is shielding households from the random fluctuation in prices seen on the wholesale markets, but that is poor comfort for consumers as a whole with current bills and prices across the board still expecting to see a sharp increase.

See below from Boomberg/BBC:

Gas Prices Have Soared in Last Year

Where Can I go for Advice/Help?

While many consumers are rightly concerned regards their energy prices rising and the impact it may have on your ability to pay your bills, there is help available.  First, check whether you are eligible for the Warm Home Discount Scheme, which offers a one-off payment to help meet heating costs.   National Energy Action (NEA) are also currently urgently calling on the Government to provide more support for low-income households.

Additional help, including energy-saving advice and potential sources of financial assistance, is available where you live:

Also, tenants can also contact your Local Councils/ Landlord/Housing Association for help/advice regards insulation, reducing your energy consumption and heating your home in general.  There are also many websites with lots of advice and helpful tips.  Your local library is also a great resource for information.

Where Do We go From Here….?

Looking to the future of consumable energy Business Secretary Kwasi Kwarteng, said the right response to rising gas prices was to renew the UK’s commitment to renewable energy.  The government recently pledged to shift electricity generation away from fossil fuels entirely by 2035.  Mr Kwarteng stated, “The UK so far, as many of you know, has made great progress in diversifying our energy mix. But we are still very dependent, perhaps too dependent, on fossil fuels and their volatile prices.  Decarbonising heating and power will mean lower prices” Our homes and businesses will be powered by affordable, clean and secure electricity generated here in the UK, for people in the UK”.

The publics favourite ‘money guru’ Martin Lewis stated on his most recent television show only last week, “do nothing with your energy supply and roll on to the price cap when your deal ends rather than trying to switch, inaction is now the best action!”.

So for now we are best advised to listen to the experts, take good advice on ways to save energy and reduce our heating bills as best we can, wrap up well and brace ourselves for a financial chill – that could last longer than the winter!

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