In more unwelcome news for consumers, the energy price cap will again rise in October 2022.
Since the beginning of 2021, about 30 energy companies have gone bust. This was mostly due to those companies’ inability to continue to buy the energy they needed from suppliers to heat their customers’ homes at the prices they had promised them. The main reason for this was a global increase in demand and drop in supply for wholesale natural gas.
While consumers’ energy supplies were uninterrupted due to automatic transfers to larger, more stable firms, the message was clear: energy costs were about to rocket. It is increasingly clear, due to world events, that the cost of buying energy from producers will be passed on the customers in order to keep the energy industry afloat.
The energy price cap was introduced in 2019 to protect households as much as possible. It is calculated on six-month periods and is based on typical consumption of both gas and electricity (known as Dual-Fuel). Crucially, the cap takes into account wholesale prices from the previous six months. When wholesale prices go up, this can lead to bill-shock twice a year.
This may seem particularly galling in the face of record profits for several energy firms, although some of that profit will be redistributed to consumers in the form of rebates. We cover how these are being applied in another blog, read more here.
An Ofgem spokesperson said: “Our top priority is to protect consumers including making sure bill payers pay a fair price and we engage with suppliers to ensure they are treating and billing consumers fairly.
“We know this is a challenging time and customers struggling to pay for energy may be eligible for extra help such as debt repayment plans, emergency credit for prepayment metered customers and priority support.
“Higher energy bills are never welcome and any customer worried about bills should contact their supplier to access available support.”
However, this will ring hollow for many consumers, who already saw a 54% increase in energy prices in April this year.
The worse news? Prices will rise again in October by an expected 32%, pushing the average yearly household energy bill close to £3,000. You can check how the price cap will affect you on Ofgem’s website.
Many families will be looking for ways to save money. Here at Little Birdie, we can’t solve the energy crisis single handed, but we can help you make sure you’re not paying for unused subscriptions and free trials. The Little Birdie app is launching soon! To join our waitlist, simply enter your email on the homepage.
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