Money to burn: Most households will increase their energy bills in the coming months
As families face a tough winter of rising energy bills, annual costs are expected to rise hundreds of pounds for many.
Most of the best energy deals have already been withdrawn from the market and suppliers are rushing in, leaving millions of customers in need of a new provider.
Why is this happening?
Bulk gas prices have been rising — up to 70 percent in one month and up to 250 percent since the beginning of the year.
This is due to a combination of factors, including rising demand after the lockdown, dwindling supplies from Russia, fires that disrupted electricity supplies from France and a particularly cold winter last year, which ended stocks higher than usual. .
What does this mean for energy bills?
Most homes will see their energy bills increase in the coming months, some as high as hundreds of pounds a year. However, the hike will depend on the type of deal you are dealing with.
If you are on a fixed rate tariff, your supplier cannot increase your gas or electricity costs until the end of the deal.
But, when this happens, you will be taken to the default tariff, which is likely to be quite high.
You can shop around for a new fixed-rate deal, but it’s likely that any available will be more expensive than your current one.
Some suppliers are offering fixed rate deals close to £2,000 per year (based on average energy use) – more than double the transaction cost available over the past year.
About 15 million households are on their supplier’s default tariff, which is subject to an energy price cap that limits how much they can be charged. But the price range is rising early next month, which will add another £139 to the average annual bill.
Experts have warned that a £280 increase may be possible as early as April, when the energy price cap is to be reviewed. This will on average bill up to £1,455 per year.
What’s up with the suppliers?
Seven energy suppliers have closed in recent weeks, including Avro Energy, Green and People’s Energy.
Many more are likely to come before January. This is because suppliers have to buy gas at higher prices, but cannot pass on the additional cost to customers who are at fixed tariffs or are protected from price ranges.
Small suppliers are suffering the most. Large suppliers buy energy well in advance, so they are protected in the event of a sudden increase in wholesale prices.
Smaller suppliers buy energy as they need it and are therefore more exposed to price fluctuations.
What if my supplier goes bust?
While it can be upsetting when your supplier closes, your supply will never be affected.
Energy regulator Offgame employs an alternative energy company — known as a supplier of last resort — to take over.
Trade Secretary Quasi Quarteng said last week: ‘In any scenario, we will ensure there is continuity of supply to UK consumers – through a supplier or special administrator of last resort if necessary.’
Ofgem advises customers to stay in this position and wait to move to a new supplier. But the new supplier is not required to respect the tariff you were on. That means there’s a good chance the bill will go up when people switch.
If you owe money to your previous supplier, you should get a refund within a month. However, this can often take much longer.
If your supplier goes bad, take the meter reading and do it again when the new company takes over. It may help to take pictures of your electricity and gas meters. This way, you will have a record if there is a dispute over the amount owed.
In recent weeks, British Gas has competed with customers of PfP Energy, MoneyPlus Energy and People’s Energy. EDF has adopted Utility Point’s customers.
Can I switch to a better deal?
In normal times, the solution to avoiding an expensive energy charge would be to search for a better deal on a price comparison website. But it is slim picking on these websites at the moment.
Some, such as Compare Markets, have even suspended their energy switching service.
If you want to make the switch, make sure you do your homework first. Some tariffs require you to have a smart meter – and others to manage your account online.
And they’ll probably ask about your energy usage, although some will settle for your average direct debit payment in the past.
Also check customer service reviews.
What if I’m struggling to pay my bills?
If you are concerned about not being able to pay your energy bill, you should contact your provider immediately.
They will be able to offer advice and talk through the options. Debt advice charities like StepChange also offer free, unbiased help.
what else can I do?
Small changes can all add up to reducing energy consumption. For example, turning off appliances from standby mode can save £36 a year, while lowering the thermostat one degree can save £80 a year.
Turning off the lights when not in use can save £14 per year.
Big savings require an initial outlay, such as installing insulation, switching to a more efficient boiler, and opting for energy efficient white goods when it’s time to replace your old ones.
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