Feeling ripped off by energy companies is a common experience. Over several years, people across the UK got really fed up of hearing news that wholesale energy prices were sometimes going down as well as up, while home energy bills were only ever heading in one direction! Energy regulator Ofgem stepped in, and since 2019 they have applied a price cap to each unit of energy supplied by an energy provider, as well as their standing charges.
Twice a year, Ofgem looks at the worldwide energy market, noting any fluctuations in fuel costs – mainly natural gas – and using these to tweak the price cap up or down.
While it’s reassuring to know that prices are now regulated rather than greedy corporations having householders at their mercy, the general trend of the price cap is discouraging. In February 21, an increase was announced, to take effect from April 21, adding £96 a year to a standard (default tariff) bill. Then in August, the regulator had more bad news: from October 1st a further 12% increase will be allowed – adding yet another £139 to an annual household bill for those on default tariffs (anything other than a fixed-term deal) paying by direct debit. Those on prepayment meters, as usual, are hit even harder, with a £153 annual increase.
The basic cause of these price hikes is the ever-upward cost of wholesale gas, now at its highest level in 16 years. From September 20-21 alone it rose 324%. Ofgem justified the raising of their price cap with an explanation that energy companies would be operating at a loss if they didn’t allow it. And it doesn’t end there. Analysts are predicting a further increase to the price cap in April ‘22, adding yet another £278 per year for someone on a variable tariff, and for someone on a currently favourable fixed deal, the jump up will be even more. Suppliers have already withdrawn such deals from the marketplace. Someone who took a good deal last year for 12 months at, say, £842 (the average market-leading price at the time) could face an increase of £712 when that deal ends.
An obvious answer is for countries to reduce their dependency on natural gas! That is why choosing a renewable energy supplier – one that invests in increasing renewable energy production – is so important.
We produce clean electricity here on Gower, and work with our super-green partner, Ecotricity, to supply it to local homes and businesses. We don’t have any control over bill pricing. However, being community-owned and not-for-profit means we do have the opportunity to work more flexibly than other providers. As you know, all our surplus income goes to support projects that benefit our local community. But sometimes, our immediate community – our customer community – needs help too. We have the option to use some of that surplus to give customers a rebate off their bill at the end of this year. It could be up to 20%, if we can get enough customers signed up.
So please spread the word, switch to us, and join the conversation about how not-for-profit, local, community energy companies can help protect customers from global fuel price-hikes.