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Blog Post 20 January 2022

Why are energy bills going up?

It’s been hard to miss news about energy bills over the past few months, and you may have seen reports about the ongoing energy crisis. But what is the energy crisis and what does it mean for your energy bills?

The energy crisis is an ongoing shortage of energy across the world, which is affecting many countries including the UK.

As countries began to recover from the pandemic, demand for gas started to increase again and could not be met due to a shortage in supply, causing gas prices to increase in 2021. The problem was made worse by renewable sources like wind and solar producing less power and cold weather during the winter months forcing more people to turn their heating up.

This increase in gas prices has forced some energy suppliers in Great Britain out of business. By the end of December last year, a total of 28 energy companies had gone bust, including bigger companies like Bulb, affecting over two million customers. If your energy supplier collapses, you don’t need to do anything. You will still receive your gas and electricity as usual. Ofgem, the energy regulator, will move your account to a new supplier. They will let you know which one this is.

What does it mean for your energy bills?

Ofgem introduced an ‘energy price cap’ in Great Britain in January 2019 following concerns that many people, particularly those who did not switch supplier to find cheaper deals, were paying too much for their energy. The cap is the maximum amount energy suppliers can charge for their energy.

The cap is reviewed twice a year, in April and October. On 3 February, Ofgem announced that the cap will increase from 1 April 2022 for approximately 22 million customers. Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 per year. Prepayment customers will see an increase of £708 from £1,309 to £2,017. We have more information on the energy price cap in our blog.

What can I do to reduce my energy bills?

When prices rise, it’s predicted that the number of households who can’t afford to heat their homes to the temperature needed to keep them warm and healthy will increase from 4 million to 6 million. At Energy Saving Trust, we’re here to help. Millions of householders are already saving energy and money by following our tips and advice.

We recommend that you try and reduce how much energy you currently use at home – for example, turning off the lights when you leave the room or reducing the number of times you use your washing machine in one week. Our quick tips all add up and could help you start saving on your energy bills today.

What can government do about the energy crisis?

We’re calling on the UK Government to provide emergency funding for households that need it the most, helping to protect people from rising energy costs now. Other measures like cutting VAT on energy bills, for example, could help the average household save around £90.

In the longer term, the UK Government needs to increase efforts to insulate our homes, which will reduce the amount of energy we need, as well as increase the pace of the roll out of renewable energy. Moving to renewable energy sources like wind and solar power will reduce our dependence on fossil fuels like gas, helping to avoid future energy crises.

Is there financial support to help my pay my energy bills?

If you need help to pay your energy bills this winter, there is support available, wherever you are in the UK.

We’re also working with Citizens Advice in England and Wales to help you save money. For advice on everything from taking a meter reading to what to do if your supplier goes bust, Citizens Advice can help.

Last updated: 4 February 2022