Britain is in the midst of an energy market crisis, with seven energy firms collapsing in the past few weeks, with more thought to be at a severe risk.
Analysts are likening recent events to the financial crisis of 2008; however the Government maintains it won’t bail out suppliers. This has left some customers facing an almost 50% increase in bill payments.
What’s happening to energy bills?
For those who are waiting to find out if their energy provider goes bust, they could find an increase in prices as the weather turns colder. From the beginning of October, the price cap set by Ofgem will rise by 12% for dual fuel tariffs.
The price cap is the maximum your supplier can charge for a unit of energy, with standing charges and VAT taken into account – with different areas around the UK facing different price caps.
Providing some peace of mind, if your energy provider does go bust – your gas and electric won’t be cut off. You will, however, be assigned a new supplier – but you’ll have no say as to who that new supplier will be. If this happens – you must take your meter readings with you and cancel your current direct debit.
One large problem for customers is that the new suppliers won’t honour the old providers tariffs. Ofgem have confirmed the new default suppliers can only place their inherited customers on a price-capped tariff.
What will happen in the future?
Households who were on the best fixed-rate deals taken out a year ago will see their energy bills rise by more than £400, with further increases to be seen from April 2022.
Unfortunately, this is just the beginning of the price increases. Experts have already started warning prices will rise to between £1400 and £1500 per year – for average use that is. Bigger households will face paying considerably more annually.
It is hoped the market will calm down and wholesale prices return to normal; but no official word yet.
Households who are on a lower income or are in receipt of specific benefits, may be able to reduce their energy bills with the Warm Home Discount Scheme. Many major suppliers who aren’t at risk of closing, have reopened their WHD schemes for 2021-22.
Citizens Advice have said for those struggling to afford their gas and electricity bills should contact their provider, who has a duty to help you come to a solution.
While there continues to be some worry surrounding energy companies and energy prices in the UK, there are some things you can do around the home to help yourself. Installing energy efficient measures such as smart thermostats and radiator valves can provide you with greater control over your usage and spend.