Ofgem price cap announcement
The energy price will rise by 54% on 1 April 2022. What does that mean?Read More
Updated 26 May 2022
The news can be a bit overwhelming right now, headlines about gas shortages, price increases and energy suppliers going out of business are confusing. We want to explain a bit about what’s happening and let you know what help is available for you.
Firstly, we now know that the price cap rose by 54% on 1st April 2022 and is predicted to go up a further 42% in October. The price cap is a maximum amount that can be charged for electricity and gas standing charges and unit (kWh) rates. Remember if you use more, then you will pay more.
For detailed information on what this might mean for you, Martin Lewis has done some wonderful work around the issue, visit his website here.
If you are going to struggle to pay your ongoing energy bills, alert your supplier as early as possible.
There is no short answer; it’s a complex issue. Wholesale gas prices have gone up by a record 350% since this time last year, including 37% between January and April this year. There seems to be four main factors; some recent limits to gas supplies from Russia as well as the conflict in Ukraine; an upturn in global gas demand as economies reopen after Covid-19 lockdowns; a cold winter last year which prompted higher gas demand and reduced the amount we have in storage; and lower wind speeds this autumn which mean more energy has been generated with gas rather than wind.
Everything that we do, from upgrading existing and new-build homes to be less reliant on imported gas and more affordable to live in, to generating more local renewable energy, to supporting households to understand how to manage energy use and access available financial help, all contributes to making our community more resilient to crisis situations like this.
Looking more broadly, the way we produce and use energy is unsustainable. Moving away from fossil fuels, like gas, is one of the biggest challenges facing the UK but by no means impossible. Saving energy at home is an important step people can make across the country, but we also need urgent support from government to help everyone move to zero-carbon energy in a fair and supported way.