On October 1, 2021, the price of energy increased, which means energy bills for many families. But can prices rise again? And if so, how can you control your gas and electricity bills? Let’s take a look.
What is the energy price cap?
Well, that’s basically a limit (or ‘cap’) on how much your gas and electricity supplier can charge you for energy.
The UK’s energy regulator ofjem sets consumer protection limits on the default energy tariff (your supplier’s basic tariff). So, while it is often better to shop for energy transactions, the price cap gives you at least some protection from paying extra high tariffs.
Why is the energy price cap rising?
In short, supply declines and high demand raises gas prices. There are several factors affecting gas prices in the UK, including:
- Demand for gas has increased worldwide
- Europe has gas shortages and low gas reserves
- Wind speeds are lower in the UK, which reduces our renewable energy production
About 15 million UK households are experiencing a 12% increase in electricity consumption at the moment, and unfortunately, further price increases may come.
Can fuel prices rise again?
Yes, especially if wholesale fuel prices continue to rise.
There is some short-term good news though. From what we know so far, the cap will not increase in the next few months. That means the current cap is expected to be in place by the winter of 2021.
Will the price cap really increase in 2022? It’s too early to say for sure, but here’s why it will probably engage.
- The demand for gas increases in autumn and winter, which puts pressure on the supply.
- There is no clear solution to the gas shortage affecting Europe.
- Gas prices are unlikely to fall in the coming months.
There is no offzem due to reviewing the cap on energy prices until April 2022, although there is an opportunity to review the cap earlier. However, until we see gas prices fall, the price range will likely increase next year, regardless of when OffZem will review current rates.
How can you prepare for high energy bills?
Here are some tips to help you manage your gas and electricity bills this winter:
- Simply heat the rooms you use during the day. If you spend most of your time in a room, a portable electric heater can be more profitable than your gas supply.
- Close the draft from windows and doors using a draft-proofing strip. You can find reasonably priced strips in places like B&Q.
- If you can afford it, consider newer, more efficient models instead of old white things, such as washing machines and refrigerators. And if you put your new purchase on a 0% credit card, you pay no interest if you close the balance within 0% of the time.
- Instead of using a tumble dryer, let the fabric dry where possible.
- Turn off electrical equipment standby so you don’t waste energy.
- Keep warm several times a day or for an hour. The house will get hot, but you are not leaving it hot all day.
Finally, if you can, consider withdrawing money to an emergency fund right now. That way, if your energy bill goes up, some extra cash will be available to cover your expenses.
While there is no guarantee that the energy price cap will rise again in 2022, it does pay to be ready. Energy bills are treated as ‘priority’, so if you don’t pay your bills, you can seriously damage your credit score and finances. You can contact your provider and organizations like Citizen Advice if you are struggling to pay.
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