The UK is, undeniably, in the middle of an energy crisis. The talk and the planned rise to the cost of fuel has affected everyone across the country. Ofgem, the energy regulator, has capped the rise but if you continue to use more fuel than normal you will still see a higher increase in your bills. This is because the 54% increase is per unit, it’s not a cap over your total bill.
Money Saving Expert, Martin Lewis, explains in more detail why you may find your bills are higher than the anticipated 50% increase here.
Many have found they are struggling to pay their bills, currently the fuel price rise will see them struggle more. Taking out a payday loan isn’t always the answer.
Gas prices are at their highest, right across the world. This means that energy companies are paying more for their supply and that cost is also passed down to us, as consumers, leading to a crisis. The UK gas reserves have been at an all-time low. If supply is low and demand is higher, this means an increase in cost.
The Russian invasion of Ukraine has also had a negative ripple effect. Many other European countries are reducing their reliance on Russian supplies. In the past, the UK has bought extra gas from other European countries, but they too are struggling with lower than usual reserves, and are in no position to trade. This means, (you’ve got it), that prices increase.
Added to the already perfect storm, the UK has seen a colder winter in 2020/2021, including less wind and sun over the past couple of years. Therefore our renewable energy sources have seen a dip too.
85% of UK residents heat their homes with gas boilers, far higher than any other European country, so our supplies are in even more demand. Many UK energy suppliers have folded over the last few months, leaving less competitive pricing for consumers and making the crisis worse.
Unless you are on a fixed energy contract, you will have undoubtedly seen, or will see, a hike in your bills. Ofgem, the UK’s energy regulator has capped the soaring costs at 54% (per unit) and is due to issue another review in October 2022.
BREAKDOWN OF A DUAL FUEL BILL
In the UK, we see grocery prices rising, inflation at a 30 year high, astronomical petrol prices, and National Insurance contributions increasing from April 2022. Rail travel, broadband costs and mortgage payments are all rising too. It all feels rather bleak. And now the Government has said we are entering into another recession.
Money-saving experts advise against switching suppliers because none can offer any better deals currently. On the other hand, if you are on a fixed-price contract, rather than the standard variable ones, you won’t see the energy price hikes quite so dramatically.
However, do remember that any energy increases are also dependent on the amount of gas and electricity that you use. This energy crisis price cap is per unit of fuel, not a cap on your overall bill so if you use more fuel, you will pay more. Therefore, each tweak you can make to what you use will see you paying a little less.
However, there are many things you can do to try and keep costs lower around the home.
Thermostats and radiators
The Government has initiated some ways to help, but unfortunately, there is no magic wand to drastically change the rising costs.
Rishi Sunak, Chancellor of the Exchequer, has said –
“Right now, I know the number one issue on people’s minds is the rising cost of living.
That’s why the Government is stepping in with direct support that will help around 28 million households with their rising energy costs over the next year.
We stood behind British people and businesses throughout the pandemic and it’s right that we continue to do that as our economy recovers in the months ahead.”
The Energy Bills Rebate
The Government is providing £9.1 billion of financial aid to help struggling households. From October 2022, each domestic electricity home will receive a £200 credit on their bills. This will be repaid in equal £40 instalments over the next five years, beginning in 2023. The Government hopes the energy prices will begin to decrease by this time.
The £200 aid is not a loan, there is no interest added that you need to repay and will not affect your credit report. If you have a prepayment meter, you will not miss out. You will receive vouchers to secure what is due.
Each household in council tax bands A through to D will also receive a £150 rebate. This will be provided by your local authority from April 2022, and will not be repaid by the eligible household. This one-off payment should help over 28 million individuals and families across the country.
The £150 rebate should be paid into your account in April if you pay by direct debit. If you pay by another method, your local authority will contact you to arrange a way to pay you the rebate. This is a payment to you in a lump sum, not a discount on your council tax bills.
The Government has produced a factsheet with all the Energy Bills Rebate details, which you can view here.
The energy prices and crisis show no sign of decreasing just yet, and experts believe that by October 2022, at the next 6 month review, we will see another increase in the price caps.
All things considered, if you find you are struggling, there are organisations that may be able to help.
Here at Pixie, we may be able to help find you an emergency £300 loan, for example. A payday loan could help you with a quarterly bill.
Firstly, speak with your energy provider to inform them that you are having problems. Ofgem has a comprehensive guide on how to begin getting any help you may need. Citizens Advice has a wealth of information available if you aren’t sure where to start or need any other advice.