Avoid a Crisis as Soaring Energy Costs Burn Your Money

How To Avoid A Crisis This Winter As Soaring Energy Costs Burn Your Money

Money to spend: most households will see their energy bills increase in the coming months

Households are facing a harsh winter with skyrocketing energy bills, with annual costs expected to rise by several hundred pounds for many. Most of the best energy deals have already been taken off the market and suppliers are going bankrupt in droves, leaving millions of customers in need of a new supplier.

Why is this happening?

Wholesale gas prices are skyrocketing, 70% in one month and 250% since the start of the year. This is due to a combination of factors, including an increase in demand following the closures, a reduction in supply from Russia, a fire disrupting France’s electricity supply and a particularly cold winter last year. , which left stocks more depleted than usual.

What does this mean for energy bills?

Most households will see their energy bills increase over the next few months, some by the equivalent of hundreds of pounds per year. However, the increase will depend on the type of agreement you are on.

If you are at the fixed rate, your supplier cannot increase the price of your gas or electricity until the end of the contract. But, when that happens, you will be transferred to the default rate, which will likely be considerably higher.

You can look for a new fixed rate offer, but you will likely find that any available offer will be more expensive than your current one.

Some providers are offering fixed rate offers of almost £ 2,000 per year (based on average energy consumption), which is well over double the cost of the offers available last year.

About 15 million households benefit from their supplier’s default tariff, which is subject to an energy price cap that limits the amount they can be billed. But the price cap rises early next month, which will add another £ 139 to the average annual bill.

Experts warn that a further increase of £ 280 could be possible as early as April, when the energy price cap is expected to be revised. That would take bills up to £ 1,455 per year on average.

What is happening with the suppliers?

Seven energy suppliers have gone bankrupt in recent weeks, including Avro Energy, Green and People’s Energy.

Several more are expected to follow before January. This is because suppliers have to buy gas at higher prices, but cannot pass the additional costs on to customers who benefit from fixed tariffs or protected by price caps.

Small suppliers suffer the most. Large suppliers buy energy well in advance, so they are protected when wholesale prices suddenly increase. Smaller suppliers tend to buy the energy they need and are therefore more exposed to price fluctuations.

What happens if my supplier goes bankrupt?

While it can be overwhelming when your supplier goes bankrupt, your supply will never be affected.

Energy regulator Ofgem is appointing an alternative energy company – known as a supplier of last resort – to take over.

Business Secretary Kwasi Kwarteng said last week: “In all scenarios, we will guarantee UK consumers continuity of supply – through a supplier of last resort or a special administrator if necessary.”

Ofgem recommends that customers in this position stay put and wait to be transferred to a new supplier. But the new supplier doesn’t have to honor the rate you were on. This means that there is a good chance that the bills will go up when people change.

If your old provider owed you money, you should receive a refund within a month. However, it can often take much longer.

If your supplier goes bankrupt, take a meter reading and start over when the new business takes over. It may be helpful to take pictures of your electricity and gas meters. This way you will have a case if there is a dispute over what is owed.

In recent weeks, British Gas has taken over customers from PfP Energy, MoneyPlus Energy and People’s Energy. EDF has adopted Utility Point customers.

Can I upgrade to a better deal?

Normally, the solution to escaping an expensive energy tariff would be to search for a better deal on a price comparison site. But these are thin picks right now on these websites. Some, like Compare the Market, have even suspended their energy switching service.

If you want to change, be sure to do your homework first. Some tariffs require you to have a smart meter – and others to manage your account online. And they’ll likely ask you questions about your energy usage, although some will settle for your average direct debit payment in the past.

Also check out customer service reviews.

What if I’m having trouble paying my bills?

If you are concerned that you will not be able to pay your energy bill, you should contact your supplier immediately. They will be able to offer advice and discuss options. Charities such as Stepchange also offer free and unbiased help.

What else can I do?

Small changes to reduce energy use can all add up. For example, turning off appliances in standby mode can save £ 36 per year, while lowering the thermostat by one degree can save £ 80 per year. Turning off lights when not in use saves £ 14 per year.

Larger savings tend to require an upfront down payment, such as installing insulation, switching to a more efficient boiler, and choosing energy-efficient appliances when it comes to replacing your old ones.


About Janet Young

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