Why Energy Prices Are On The Rise
Experts say there could be a large increase in household bills. The UK’s energy price cap, which is the full amount a utility company can charge the average customer, is due for review on the 7th February.
August 2021 saw the cap rise by £139 to £1,277 a year. Now industry specialists are concerned that by the time we reach the next assessment, it could increase by a staggering 50% to £1,925 a year, starting from the 1st April.
The cap will then stay until the 1st October where it will be reviewed and likely changed again. It’s uncertain what the next figure will be as it depends on wholesale prices throughout February until the end of July. However, it's predicted that if they stay as they are currently, then we could see a rise by another 20% in October.
Why Are Energy Prices So High?
There are a few reasons why we’re seeing a rise in energy prices. Firstly, as countries begin to recover from the pandemic, the demand for gas has started to increase and unfortunately cannot be met due to supply shortages, resulting in gas prices increasing in 2021.
The issue was then worsened by renewable sources like wind and solar producing less and less power as the cold weather during the winter months forced more people to increase their heating.
How Energy Prices Are Affecting Businesses
Similar to homeowners, businesses will face a considerable rise in their bills. This could result in having to reduce, pause or cease production, meaning potential job losses. Customers may face higher prices as a result of increased business costs.
This sudden spike in gas prices has had a devastating knock on effect for a number of energy suppliers across the UK who have now gone out of business. According to Citizens Advice, by January 2022, a total of 29 energy companies including companies like Bulb have been disbanded or put into special administration, affecting millions of customers.
However, if your energy supplier has been affected, you do not need to do anything as energy regulators Ofgem will move your account to a new supplier and notify you of any changes. You will still receive your gas and electricity as usual.
Should I Switch Energy Companies?
Previously when energy prices rose, customers were often advised to look elsewhere and shop around for better prices.
However, currently there appears to be no fixed deals or offers available and people have been advised to stay put.
In fact, instead of shopping around for cheaper deals, homeowners are being encouraged to see if they can make changes to their energy use at home.
What Can I Do To Reduce My Energy Bills?
There are a few things you can do to help save more on your energy bills, the BBC has listed some money savers which you can see here:
Turn thermostat down by one degree (£55 p/a)
Switching to LED bulbs (£30 p/a)
One less wash a week on dishwasher or washing machine (£8 p/a)
Draught-proofing windows and doors (£25 p/a)
You could also turn the lights off whenever you leave a room. Subtle changes like this could make a substantial difference to your energy prices.
Switching over to renewable energy sources like wind and solar power will reduce the overall dependency for fossil fuels like gas and avoid a potential energy crisis in future.
How Can The Government Help With The Energy Crisis?
For households that are severely affected by rising energy prices, the Government needs to provide emergency funding. This will immediately help protect those struggling from rising energy costs.
The Government could also take measures such as cutting the VAT on energy bills which could then help the average homeowner save around £90.
If the Government can increase efforts to insulate homes, it will significantly reduce the amount of energy we need.
Summary
So it seems increasingly likely that energy prices will rise and right now there isn’t much scope to shop around for cheaper energy providers. However there are small changes you can make at home which can help reduce your energy bills.
Investing in renewable energy like solar power could potentially save you money in the long run and make you less dependent on the grid. In fact, solar panel prices are the cheapest they’ve ever been and have dropped 28% since 2014. Plus, unlike gas suppliers right now, there is a lot of healthy competition on the market, meaning that companies will offer better products for lower prices.
If you’d like to know more about solar panel prices, just enter a few details and we’ll take care of the rest.