Households across the UK have received notice from their Energy Suppliers about price increases, and how much more they will pay from April.
On Friday evening, social media erupted with both British Gas & Bulb Energy topping the trending page due to shock from customers receiving emails detailing these price rises.
Energy suppliers are required by law to notify their customers about price increases with a “reasonable” amount of time. The price rise, what it implies financially for the consumer, and when it takes effect should all be included in this.
Customers on British Gas‘s capped tariffs will pay 28p-30p per kWh for power from April 1. Electricity will have a daily standing fee of 45p-51p, while gas will have a daily standing charge of 27p-37p. Both Bulb & Shell Energy sent out a letter to consumers this week setting similar rates, while EDF said earlier this month that its pricing will rise to match Ofgem’s price cap.
One customer expressed their shock when receiving the news that their energy bill would be increasing from £248.20 to £456.91, almost a 100% increase.
https://twitter.com/Energy_Brokers/status/1497295657673138187?s=20&t=xxCMGm8XPf-1SyIOIhr2Uw
The energy regulator, Ofgem, announced the new pricing caps last month, warning that the average household will pay just under £2,000 each year for their energy and gas, a 54 percent increase.
To offset this, the government pledged a £150 council tax rebate to individuals who live in bands A to D, which covers around 80% of families. From October, another £200 will be deducted from energy bills, but households will have to pay it back in instalments until 2023.
Why is this happening?
This all comes after a squeeze on wholesale gas prices across the world, a worldwide squeeze on energy supplies has pushed the price of gas prices up to unprecedented levels. A harsh winter in Europe put strain on supplies and limited the quantity of gas stored while a windless summer in 2021 made it impossible to create wind energy. Alongside this, growing demand from Asia put strain on liquefied natural gas supplies.
The UK is relatively hard-hit because about 85% of homes have gas central heating, and gas generates a third of the country’s electricity.
Following reports that Russian soldiers had invaded Ukraine on Thursday, wholesale gas prices increased by 28%. if these trends continue, Ofgem will have to raise prices again significantly when the cap is reviewed in the autumn. This might result in annual gas and electricity costs of more than £2,500, which will no doubt be a futher burden on households going into the winter.
Even without the effect of the Ukraine crisis, bills were looking set to rise by another £400 a year.