MILLIONS of households are facing a bleak winter as energy costs soar – with fears that annual bills could jump by £400. It is a pretty scary prospect for household budgets, but there are things you can do now to cut costs. Here we explain why bills are on the rise — and what to […]
MILLIONS of households are facing a bleak winter as energy costs soar – with fears that annual bills could jump by £400.
It is a pretty scary prospect for household budgets, but there are things you can do now to cut costs.
Here we explain why bills are on the rise — and what to do about it.
FAMILIES are currently battling against a crippling energy crisis, thanks to a double blow.
First, the wholesale price of gas has shot up to six times what it was at the start of the year.
And second, the energy price cap — which was brought in to limit how much consumers can be billed — was raised by £139 earlier this month.
With wholesale gas prices soaring, nine smaller energy firms have gone bust in the past month alone.
Their 2million customers have automatically been switched to tariffs with the bigger companies.
The energy price cap — which applies to standard or default tariffs — now stands at £1,277 a year, leaving about 15million households facing a 12 per cent rise in their costs.
Previously, savvy consumers have been able to shop around for cheaper, fixed-price deals but now those are simply not available.
Currently, the cheapest fixed tariff is £1,665 from Zebra energy, which is almost £400 more than the price cap.
Big firms are charging at least £1,800 for fixed deals. It means there is no point in switching as things stand.
A PERFECT storm of factors has driven up wholesale gas prices.
There has been more demand as the pandemic eases, but at the same time there has been reduced supply from Russia and a lack of UK wind energy in a calm start to autumn. A cold winter in Europe last year put pressure on supplies and means that stored gas levels are much lower than normal.
Meanwhile, demand is rocketing in Asia, which also had a cold winter, putting pressure on international markets.
China, which is phasing out coal-fuelled power stations, is determined to keep its people warm this year after the coldest winter for 60 years, and the country has been buying huge amounts of gas, pushing up the price even further.
Free from any democratic accountability or price caps, China does not have to worry about the cost.
Meanwhile, Russia’s President Putin has been accused of withholding gas for political ends. On Wednesday, he said he would increase supply and the price fell dramatically.
Yesterday, the International Energy Agency advisory body called on Russia to be “a reliable supplier” and increase production — but Russia denies withholding gas.
THE UK is one of Europe’s biggest users of natural gas — 85 per cent of our homes use gas central heating, and gas is also used to generate a third of our electricity.
The National Grid yesterday warned that electricity supply would be “tight” and this could push up bills further.
In an extra stroke of bad luck, there has also been recent damage to a power cable supplying electricity from France.
Britain is particularly vulnerable to fluctuating prices because we have so little gas storage — just two per cent of our supplies, compared to between 25 and 37 per cent in Germany, Italy and France.
EXPERTS say the price cap could soar to £1,559 when it is next assessed in April.
But as that is still six months away, you should sit tight.
If you are on a fixed tariff — that’s good news. You have locked in a cheap price and should stick with it.
Make a note of when it ends then reassess your options one month before.
If your fixed tariff is ending soon, then do not switch — it is likely you will not get a cheaper price elsewhere and you should probably stick with the standard tariff which you will automatically be rolled on to.
If you are on a standard tariff then stick with that, too. The price cap will go up but for now it is the best option.
THE spike in prices has caused a number of firms to collapse — with the latest being Enstroga, Igloo Energy and Symbio Energy.
And there could be more to come.
At the beginning of 2021 there were 70 UK energy suppliers, but some industry sources have predicted that number could be as low as ten by the end of the year.
If it happens to your supplier, do not panic. Ofgem will find you a new firm to take over the supply, and any credit you have should be protected.
Take meter readings and wait for your new supplier to contact you within a few weeks.
LOOKING for a cheaper deal may no longer be an option, but the less energy you use, the lower your bills will be.
