With wholesale gas prices increasing, energy firms announcing price rises, and several firms closing, we’ve been inundated with questions about how this affects you and what to do if you’re affected. Here we answer some of your most common questions.
Will my energy bill go up because of higher wholesale gas prices?
If you’re on a variable deal, your price can change whenever your supplier increases (or cuts) its prices. You’ll get 30 days’ warning of this change.
Up to 15 million customers faced a bill increase from 1 October 2021. That’s because the price caps on out-of-contract energy deals rose, adding £139 on average to annual bills – more if you have a prepayment meter or use lots of energy.
If you’re on a fixed deal, your rates can’t change until it ends. But when it does you might struggle to find a deal as cheap as the one you’re on.
What if I can’t afford a bigger energy bill?
‘I’m more worried about the energy price hike than literally anything else right now for the direct and substantial effect it will have on low-income families.’
Help is available if you’re worried you’ll struggle to pay higher energy bills.
Start by contacting your energy supplier. It might feel like the last thing you want to do, but the company won’t cut off your supply if you work with it to agree how much you can pay.
Energy firms must agree a payment plan with you that you can afford. Options can include:
- Reviewing your payments or debt repayments
- Reducing your payments or taking a payment break
- Allowing more time to pay
- Access to hardship funds.
Also ask whether you can be added to its Priority Services Register. This gives free help and support if you’re in a vulnerable situation.
Check whether you are eligible for government schemes and benefits:
- The Warm Home Discount is £140 off your electricity bills if you get the Guarantee Credit element of Pension Credit. You might also qualify if you have a low income.
- The Cold Weather Payment is £25 for each seven days between November and April that it’s below 0°C. Certain benefits qualify you for this.
- The Winter Fuel Payment is £200 if you’re over 66 or £300 if you’re over 80. You should get it automatically if you get the State Pension.
If my energy supplier fails, will my gas and electricity be cut off?
No. Your gas and electricity supplies will continue as usual if your energy supplier stops trading.
Ofgem will find a new supplier and you’ll be automatically transferred. That company will then contact you, and you’ll start paying it for your gas and electricity usage. If you have a prepayment meter, any credit you’ve already loaded onto your meter can be used as normal. The new supplier will send you a new key, card or other equipment to top up your meter as a priority. If you need to top up before you’re sent a new key or card, contact your new supplier for help.
If my energy supplier fails, will I have to pay more?
Unfortunately, the answer is probably yes. Some of the recently failed suppliers had offered quite cheap energy deals. Last year, when you may have agreed your tariff, gas prices were low. They have risen more than 250% since January, according to industry group Oil & Gas UK.
That means energy companies aren’t currently selling deals as cheaply as they were in the past. If your supplier closes, you’ll be moved to a new supplier and put onto its ‘deemed’ tariff. This tariff is one you haven’t chosen, so you can stay on it for as long (or short) a time as you choose and won’t be charged exit fees to leave.
However, these tariffs can cost more. This is because ‘the supplier takes on more risk’, explains energy regulator Ofgem. For example, it might have to buy extra wholesale energy at short notice for new customers. Wholesale energy is pricey at the moment.
You can ask the new supplier to put you on its cheapest tariff.
If my energy supplier fails, what should I do?
Don’t panic. Your gas and electricity supply won’t be cut off. Any credit you have will be protected.
You will be moved to a new supplier, chosen by energy regulator Ofgem. It usually takes a couple of days for a new supplier to be chosen, and a couple of weeks to be transferred.
The new supplier will get in touch with you to tell you about your new tariff, how payments will work and how you’ll get any credit back. While you wait:
- Take a meter reading (take a photo if possible so you have a dated record)
- Don’t switch supplier (this can make it trickier to transfer you and pay back any money you’re owed).
With no cheaper deals, see the price cap as a six-month fixed deal
Having always been among the most expensive deals, price-capped variable tariffs are now among the cheapest – cheaper than the cost price of energy. There are no deals for new customers meaningfully lower. In fact, very few providers even allow new customers to switch to their price-capped tariffs at the moment.
As this new cap will last until 1 April 2022, you could treat it as a six-month fixed rate, which you have the freedom to leave whenever you want (hopefully because cheaper deals return).
In comparison, if you want a fixed deal right now, you'll pay much more than on a standard tariff – the cheapest is a one-year fix from Scottish Power at £1,577/yr. on typical use, £300 more than the price cap.
On 1 April, it is likely the price cap will rise substantially again - on the current run-rate, the prediction is another 14% hike to £1,455/yr (on typical use) - still cheaper than today's cheapest fixed-rate deal. If things deteriorate further, fixes may look a decent price with hindsight, but right now it seems a very substantial premium to pay for certainty, and our best guess is, for most, it isn't worth.
