Why are energy bills going up?

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 forced some energy suppliers in Great Britain out of business. By the end of December 2021, 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. 

More recently, Russia’s invasion of Ukraine has threatened supplies and driven up prices further. Russia is one of the world’s largest producers of oil and gas, supplying the EU with 40% of its gas in 2021. 

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 sets the maximum amount that energy suppliers can charge for each unit of energy and the standing charge.

The cap was due to go up again by 80% from 1 October 2022 for 24 million people in England, Scotland and Wales.

But then, the UK Government introduced the Energy Price Guarantee. This has frozen typical energy bills at around £2,500 until June 2023. 

The figure reported is for a typical/average home, so you could end up paying more than this, for example, if you have a large home or use more energy than a typical household.   

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. 

We’re calling on the UK Government to provide further 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 best way the government can bring down bills is by reducing our reliance on fossil fuels while improving the energy efficiency of our homes. 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, while improving insulation will reduce the amount of energy we need in the first place.

See our blog for more information on what the government can do.