Updated: Feb 21, 2023
It’s unlikely you’ve missed the news that energy bills are increasing in the coming months. It can be worrying to think about how you may afford to pay them or what you can do to lower them. With so many things being discussed about what is causing the price rise – what are you meant to believe? You may seek a free heating grant or consider installing a new boiler. If so, UK Energy Management is here to help you understand rising energy bills.
What is causing the energy crisis?
There are a few factors that have caused the price of energy to rise. One being that after we began recovering from the pandemic, the demand for gas began to increase. This demand could not be met due to a shortage in supply, resulting in an increase in prices.
This was made worse by renewable sources such as wind and solar producing less power and colder weather causing people to turn their heat up. Ultimately, some energy suppliers in the UK were forced out of business – a total of 28 businesses went bust by December 2021 – which affected nearly 2 million customers. If this happens to your supplier you don’t need to do anything, your account will just be moved to a new supplier.
As we turn the corner into winter 2022, prices are rising even further because of Russia’s invasion of Ukraine. This threatened supplies as Russia is one of the world’s largest producers of oil and gas. It supplies the EU with 40% of its gas in 2021.
How will this impact your energy bills?
In 2019, Ofgem introduced an ‘energy price cap’ as there were concerns that many people who didn’t switch suppliers to find cheaper deals were paying too much. This meant there was a cap on how much customers would pay. This cap was reviewed twice a year but is now reviewed every three months to help stabilise the market. This is to stop companies from going bust as they are now able to adjust prices based on how much they are charged by wholesale providers. In October 2022, the price cap was due to go up by 80%.
However, the UK government has frozen energy bills at £2,500 for the next two years. Otherwise, the cap could have been up to £1,000 higher. If you have a large house or use more energy than the average household you may end up paying more than this.
If you’re looking for heating funding alternatives, consider an ECO 4 grant. UK Energy Management can help you get free home energy improvements to make your home more efficient and lower your energy bills. Get in touch to find out if you’re eligible for a free heating grant.