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Typical energy expenses in a family home may be reduced to more than £100 a year from July, according to analyst Cornwall Insight, writes Brean Horne.
The energy price cap, which represents the annual fuel and electricity tariff for a household with an average consumption in a dual tariff and paying by direct debit or prepaid meter, is set quarterly through the regulator, Ofgem. It fell 12% on April 1, to £1,690 a year, thanks to declining wholesale prices, and Cornwall Insight estimates it will fall another 7% for the third quarter of the year, to £1,574. 37.
Energy provider EDF predicts that the third-quarter cap could fall to £1,568, for a family with average consumption levels (2,700 kWh of electricity/11,500 kWh of fuel per year).
If the forecast is correct, this decline would constitute a 25% cut from last summer, with a cut of around £500 than in July 2023.
Energy costs are at their lowest point since February 2022, when Russia’s invasion of Ukraine sparked a global energy crisis. However, even with the drop predicted for July, they are above pre-pandemic norms.
Dr Craig Lowrey of Cornwall Insight said: “We want to recognise that falling costs erase all problems. The very fact that we continue to see turnover levels well above pre-crisis levels underscores the current demanding situations faced by households.
“While a relief at the value limit may simply save families money, the affordability of energy expenses remains a concern. “
Ofgem is in the process of reviewing the operation of the value cap. This includes if the constant rate, the constant amount you pay on your bill, no matter how much energy you use, wants to be changed.
Lowrey said: “While the cap is not, in fact, the path to return to the affordability of energy bills in the long term, the Ofgem review may simply pave the way for fairer and more effective energy bills. However, given the scale of the reforms envisaged by the regulator, it should be remembered that such adjustments will inevitably lead to trade-offs.
“For example, relief from constant tariffs, while said to be favorable for low-consumption users, can also lead to higher unit prices. This can also have a disproportionate effect on other people living in homes that are less energy efficient. or have increased energy needs, some of which would possibly be vulnerable. Finding the right balance is crucial.
“The path forward on energy prices remains uncertain, and with stakeholders advocating for reforms (along with a general election on the horizon), energy expenditures will most likely be a topic of continued debate and transformation in the coming months. “
Switching to a fixed-rate energy arrangement can help families take advantage of a less expensive rate and save money. Comparing prices and offers can reveal which option is more productive.
But you need to be wary of other fees, such as early departure fees, which can have effects on overall savings if you transfer to a fixed-term contract.
Currently, the cheapest flat rate offered for a typical dual-fuel visitor paying via direct debit is just under £1,620 per year, which is £45 more than the projected limit for the third quarter (to Uswitch’s knowledge for a typical dual-fuel visitor). -Visitor fuel by paying by direct debit).
The deal, EDF Essentials 1 year of June 25, imposes an exit payment of £25 for fuel, which is charged if transferred to another arrangement before the end of the 12-month contract. However, according to Ofgem’s rules, outbound payments do not apply if you replace within 49 days of the completion of your transaction.
By subscribing to this rate, you agree to have a Wise meter installed if you already have one.
For more money-saving tips, read our advisor on how to pay your energy bills.
Our energy partner, uSwitch, is offering a new 12-month constant EDF tariff, which is £110 below the Ofgem regulator’s energy price cap for the period 1 April to 30 June 2024.
This is the cheapest energy-only flat rate available at the switching site since October 2021.
The tariff cap stands at £1,690 per year for a family with a typical amount of fuel and electric power (2,700 kWh of electric power/11,500 kWh of fuel per year) and paying by direct debit, bringing the equivalent EDF rate to £1,580.
However, keep in mind that the limit does not restrict the amount of your bill. It controls the amount suppliers can qualify for each unit of energy consumed, as well as the related ongoing costs. The real expenses are decided through consumption.
The new deal, EDF Essentials 1 year, May 25, comes with a £25 fuel output payment. This payment will be collected if you replace it within the 12-month period (although Ofgem regulations state that this payment cannot be collected). within 42 days of completion of the transaction).
uSwitch notes that analyst Cornwall Insight predicts that the price cap could fall by around 8% from £1,690 to £1,560 over the three months of July to September 2024, which in turn could lead to the launch of cheaper deals than the previous ones. Lately available.
The new EDF package requires paperless billing and, when purchased through uSwitch, is not available to existing EDF consumers or those with prepaid or pay-as-you-go meters (only popular and Economy 7 meters are eligible for the offer). .
Forecasters are positive about short-term costs due to declining wholesale costs for natural gas, which is used in the UK to power electric power generation.
Citizens Advice has issued a warning about the increase in the number of lawsuits brought against others who are behind on their energy bills.
The number of customers the settlement helps with County Court (CCJ) judgments rendered on behalf of electric corporations is growing. Between 2020 and 2022, Citizens Advice recorded a 30% increase in the number of other people affected, but last year that number nearly doubled from 179 in 2022 to 349 in 2023.
The charity fears that this will force taxpayers into more debt, as CCJS can force other people to pay higher interest rates on loans.
Madison Stefanuik, head of debt at Citizens Advice, said: “More and more people are coming to us to talk about this issue. It’s usually about other people struggling to make ends meet and looking to prioritise council and rental taxes. As a result, they fell behind on their energy expenses and were hit with a CCJ.
“Since the rules on prepaid meters have been tightened, we have observed that some energy suppliers are increasingly CCJ and sending bailiffs to force consumers to pay their debts.
“What’s concerning is that energy debts are not regulated by the Consumer Credit Act, which means suppliers can go to the High Court temporarily after a CCJ has been granted – and sheriffs can then step in. That’s when other people regularly come to us for help, because they have competitive ushers knocking on the door and they don’t know what to do.
Dame Clare Moriarty, chief executive of Citizens Advice, said: “Getting a CCNA can be devastating. This can ruin people’s finances and put them even more in debt. That’s why Ofgem wants to introduce new permanent protections to put an end to this doomsday concern. as temporarily as possible.
Ofgem’s latest study shows that electricity debt rose to £2. 8 million per day in the last six months of 2023, reaching a record £3. 1 billion.
Citizens Advice is calling for a long-term plan to fight spiralling electricity debt, adding new protections for others who are indebted to their supplier. At this time, there are no regulations stating when it is appropriate for providers to use NNAs.
Energy suppliers expect to pay more than £540,000 in reimbursement to 2,500 “vulnerable” consumers who have been mistakenly moved to prepaid meters, according to information from industry watchdog Ofgem, writes Brean Horne.
The regulator has ordered providers to review cases where prepaid meters were accidentally installed between January 1, 2022 and January 31, 2023 to identify consumers eligible for reimbursement due to their vulnerable condition.
So far, suppliers have paid £342,450 in reimbursement to 1,502 customers, and £200,000 will be paid to a further 1,000 customers. The degrees of reimbursement for consumers vary depending on their situation and the harm they have suffered.
The inadvertent installation of prepaid counters is permitted when the visitor is heavily indebted on their credit counter account and shows no signs of payment, unless considered family as defined by Ofgem (see below).
Last year, a Times article revealed that consumers were forced to settle for a prepaid meter despite being classified as vulnerable. As a result, the unintentional installation was suspended via Ofgem while an investigation was conducted. It was restarted earlier this year, with only a limited number of vendors authorized to publish it.
Lately it’s E. ON, EDF, Octopus, Scottish Power, Tru Energy, Utilita and Utility Warehouse.
British Gas’ reimbursement figures are included because the energy company (Britain’s largest, with seven million consumers) is being investigated separately through Ofgem.
Energy providers identify affected consumers by reviewing the accounts of Americans with known vulnerabilities or complaints. They also contacted all consumers of the prepaid meters to check if this payment method is still suitable for them.
An Ofgem spokesperson said: “We are working intensively with suppliers to identify all eligible consumers and pay appropriate rebate grades in a timely manner. “
The news follows the publication of Ofgem’s “multi-year” strategy – “Protect, Build, Change, Deliver” – which sets out how Ofgem aims to deliver “clean and fairly priced” energy.
The strategy is designed to help clients cope with the financial impact of the 2022 energy crisis, in which debt levels reached record levels. Ofgem also aims to achieve a net-zero energy formula and transfer from fuel to renewable energy sources. as a component of their plans.
You may be eligible for the rebate if your electric company mistakenly installed a prepaid meter or if you switched from a smart meter to a prepaid meter.
If you think you have been affected, please report your situation to your energy provider and file a complaint. Your provider will investigate your case and your complaint will possibly be forwarded to the Energy Ombudsman and the Additional Assistance Unit if you would like additional assistance.
Suppliers will need to be approved through Ofgem and comply with strict regulations before they can install a prepaid meter without the customer’s permission.
It involves making at least 10 attempts to contact the visitor about their arrears on the energy bill and socializing before installing the prepaid meter.
Under existing rules, providers will have to protect vulnerable consumers and will not be allowed to forcibly install prepaid meters on families with:
The list of approved suppliers is subject to change, but consumers can check that a company can forcibly install a prepaid meter on the Ofgem website.
If you’re worried you won’t be able to pay your energy expenses, it’s vital to contact your provider as soon as possible. Our advisor on how to get help with your energy expenses also has more information available to help you. Stick to most of your energy expenses.
Today, April 1, 2024, the value limit of the national electricity market bill is reduced by 12. 3%, from £1,928 to £1,690. This is the amount an average family can expect to pay in a year if they have a combined fuel. and electricity tariff and pay by direct debit or if they have a prepaid meter.
Household energy expenses are expected to fall by around £20 per month. However, at the beginning of April, there are also sharp increases in municipal taxes, water charges, broadband and cell phone tariffs, as well as excise taxes. tasks on the maximum number of cars, cutting the net profit in many cases.
The energy cap, which resets every three months based on old wholesale prices monitored by Ofgem, the regulator, does not limit the amount of actual expenditure. This is a limit on how much suppliers can charge for fuel and electricity packages. and the related ongoing costs.
Typical consumption rates for an average family (11,500 kWh per year of fuel and 2,700 kWh per year of electric power) apply to the amount of the limit.
Most people benefit from energy price lists that reflect value limits per unit of energy and ongoing charges, but there are a small number of cheaper offers where the value is fixed, for 12 months. comparison to see what you can have here.
These fixed fees often come with an exit payment if you need to replace your fee before the end of the fixed period during the period. They start at around £50 per fuel, but can be much higher. So, they’re worth considering if you think you may need to replace in the short or long term if the limit drops further (note that outgoing payments can’t be cashed if you’re within 42 days of the payment end date).
Market analyst Cornwall Insight predicts that the value limit will fall from £1,690 to £1,560 on July 1 before rising back up to £1,631 on October 1. Its estimate for the first quarter of 2025 is £1,634, but it is accepted that long-term forecasts are inherently less reliable due to the vulnerability of wholesale prices to global events and weather-related demand.
In the winter of 2021-2022, the peak value sits below £1,300, so even at the current value, it remains at a peak in old terms. The regulator, Ofgem, has opened a consultation on the future of securities regulation, after concluding that the existing arrangement will not work well as new security listings emerge with variable value structures based on source and demand (see story below).
Market regulator Ofgem is consulting on the future of its price cap, which limits the amount suppliers can rate consumers per unit of fuel and electricity they use, as well as the associated ongoing costs.
The maximum limit is set on a quarterly basis. It currently stands at £1,928, but from 1 April 2024 it will be reduced by 12. 3% to £1,690. This is the amount an average family can expect to pay in a year if they benefit from a combined fuel and electricity tariff. and pay by direct debit.
Actual expenses are decided through admission: the cap doesn’t restrict how much you’ll pay. It is decided through the evolution of wholesale energy costs during the 3 months prior to its entry into force.
Ofgem says the cap, introduced in 2019, has helped consumers overcome the worst effects of rising energy costs following Russia’s invasion of Ukraine. But critics point out that the government stepped in to restrict typical spending to £2,500 a year when the cap topped £3,000 in October 2022 and £4,200 in January 2023.
The consultation, which will run until May 6, will explore tactics in which the cap could be extended “for consumers to stay while the energy market moves towards a smarter and more flexible system. “
This is the advent of “time-of-use” tariffs that offer electricity at other prices per day, allowing consumers to use appliances and appliances when overall demand levels are low and unit costs are cheaper.
Tariffs are also starting to appear to meet the desires of a growing number of families charging their electric cars overnight.
Ofgem said: “Energy markets are evolving as more consumers replace their energy consumption and roll up electric vehicles, heat pumps and solar panels.
“Our electric power sector, which is governed by renewable energy, will also praise consumers who delay their electricity consumption, lowering prices for everyone.
“As visitor diversity increases and more families adopt time-of-use rates, it can be more complicated to maintain a universal value cap that works for everyone. [We’re thinking] about how the value limit and energy regulation as a whole will be adjusted. , wants to make adjustments to make sure consumers are protected, continue to pay fair value for their energy, and enjoy the full benefits of net zero. “
As part of the consultation discussion paper, Ofgem presented a range of features for the future of value limits, including:
Acquisition-only pricing is an offer that is only available to new customers. Lately, there has been a temporary ban on such offers, recently extended to 12 months, which has prevented providers from subsidizing such offers with the profits of existing customers.
Ofgem is recently reviewing more than 30,000 responses to its call for input on ongoing charges, which closed in January.
Responses to the price cap inquiry can be submitted to Future_worth_protection@ofgem. gov. uk until Monday, May 6, 2024.
Ofgem, the energy market regulator, is cutting its fuel and electricity price cap by more than 12% from April 1, a move that will shave £238 a year off overhead, writes Kevin Pratt.
The limit limits what providers can qualify for per unit of electric power they get and for related ongoing costs. For an average family with a “dual-fuel” fuel and electric power tariff paid by direct debit, the limit will increase to £1,690 when amended at the beginning of the following quarter.
This is a 12. 3% drop from the £1,928 cap.
The approximately 4 million consumers with prepaid meters will be subject to the same limit, as Ofgem will permanently remove the “premium” that in the past was added to their bills.
Those who pay when they receive their bill or money will still pay about 5% more for their energy because of the administrative costs involved.
The maximum limit, which is updated quarterly, does not limit the number of bills that are decided through consumption. The “average consumption” figures assumed by the limit are 11,500 kWh per year of fuel and 2,700 kWh consistent with the year of electricity.
Ofgem says the April update will see energy prices reach their lowest point since Russia’s invasion of Ukraine in February 2022, which has helped push wholesale fuel and electric power prices to record highs. Domestic prices followed suit, prompting the government to interfere in October of the same year with its warranted power.
This limited expenditure to an average of £2500 per year. Then, in the winter of 2022/23, families were sent government bills totalling £400 to subsidise expenses.
The value limit is as low as £1,300 at the beginning of 2021. Ofgem admits that consumers are suffering with the high cost of expenses, pointing to record levels of electricity debt of £3. 1 billion.
The new limit includes a payment of £28 per household, spread over a year, to prevent providers from cancelling bad debts. This sum will not be charged to users of prepaid meters because, due to the nature of their payment method, the debt securities are not as chronic as those of credit meter customers.
Jonathan Brearley, chief executive of Ofgem, said the regulator is implementing measures for existing debt levels: “We will take a step back to look at issues related to debt and affordability in the market for suffering consumers, which we will announce soon.
“These measures highlight the limitations of the existing formula – we can only change the costs – and that is why we welcome the announcement that the government is opening the debate on the long-term regulation of value, the prospects on how people’s power agreements can be made more flexible so that consumers pay less if they use electricity when prices are lower.
“But in the long term, we want to think about what more can be done for those who simply can’t afford their energy bills, even if costs are falling. As we return to something closer to normal, we have an opportunity to reset and rethink the energy market to make sure it is in a position to protect consumers if prices rise again.
Ofgem says it is encouraging upgrade price recovery, thanks to which consumers opt for a more competitive offer, reducing the upgrade time to five days. Also the “market stabilization fee,” which requires companies to pay the rebate. to a new customer’s old supplier in the event of a replacement.
However, the regulator has extended its ban on “procurement-only” price lists for 12 months, a move that is perceived as a potential barrier to competition.
These fees allow businesses to offer deals exclusively to new and non-existing customers. They were banned due to the consideration that competitive wholesale prices in times of uncertainty about wholesale prices could jeopardize the financial stability of companies if wholesale prices move against them.
Ofgem says it has taken the decision not to remove the market stabilisation fee and ban on food-only price lists, as doing so could jeopardise “a slow and culpable return to market normality”.
He says he needs to spare him “a return to the risky behavior that contributed to the increased number of supplier errors during the energy crisis. “
The energy value cap will include an £16 “adjustment” for the year between April 2024 and March 2025 if proposals put forward by the regulator to take on bad debts are given the green light.
The amount, equivalent to around £1. 33 per month for credit meter bill payers, would be used through suppliers to fund a range of customer measures submitted through Ofgem.
These came into effect (December 14) after being announced on October 18 (see article below). This includes helping clients with debt by:
Ofgem says existing debt levels – estimated at £3 billion – pose a threat to the viability of suppliers. If corporations were to file for bankruptcy, additional prices would be imposed on consumers as the market absorbed “orphaned” consumers whose supplier had failed.
It is estimated that the cost of allocating consumers to some thirty bankrupt companies caused by the energy crisis caused by the war in Ukraine in February 2021 amounts to about £6,000 million.
In Ofgem’s words, “bad debt” refers to the amount of cash owed through consumers in the energy market that is unlikely to be repaid. The regulator says that adjusting the value limit is to ensure that the burden of this higher debt is reduced in the future. as fairly as possible.
He said: “The scale of this debt means that it is very important that suppliers have enough investment to ensure that they can comply with the strict regulations that Ofgem has in relation to how they treat consumers facing payment difficulties. This value limit adjustment ensures that providers have the resources they need for consumers with debt.
“Other sectors already routinely come with provisions in their securities for the costs of bad debt. However, the regulated nature of the energy sector means that Ofgem can use the value cap mechanism to ensure that those costs are recovered as successfully as possible. possible.
Under Ofgem’s proposals, any additional costs added to the price cap would be passed on to consumers with prepaid meters.
This reflects the fact that many of those consumers charge the same debt point as credit consumers (who pay late), as prepaid meters operate on a “pay-as-you-go” basis. The consultation will run until 17 enero. 2024. Se details on how to respond can be found on the Ofgem website.
Ofgem, the electricity market regulator, is extending the value limit on domestic customers’ expenditures to 5% from 1 January 2024, starting in the first quarter of the year. The latest figures from the Office for National Statistics show inflation at 4. 6% in October.
For an average family paying a dual energy tariff (gas and electricity from the same provider) by direct debit, this is an increase of £94 in annual bills, from £1,834 to £1,928.
For consumers who pay using credits on receipt of a bill (cash or cheque), the default limit will increase to £99, from £1,959 to £2,058 for typical dual fuel consumption, while the limit for prepaid consumers will accrue up to £99 from £1,959 to £2,058. £1,861 to £1,960, back for average dual-fuel consumption.
Ofgem says the increase “is almost entirely due to emerging prices in the foreign wholesale energy market due to market instability and global events, the shock in Ukraine. “
It says it will use “all means” to ensure that prices are distributed and that consumers who are suffering with their spending are supported.
The “average consumption” is estimated at 11,500 kWh per year for fuel and 2,700 kWh per year for electricity. Ofgem’s maximum limit does not limit bills, which will be determined based on the amount of energy consumed.
The tariff cap is updated quarterly and limits the amount that can be charged to consumers according to the power unit and constant charges.
Earlier this month, Ofgem opened a consultation on the option of replacing or revising constant fees, which are paid regardless of intake and which many see as a drag on reducing intake (this consultation will run until 19 January – see the story below for details). about how you can submit your feedback).
Ofgem boss Jonathan Brearley said: “This is a difficult time for many people, and any increase in spending will be worrying. But this increase, close to the levels seen in August, is the result of the increase in the wholesale value of fuel and electricity, which will have to be reflected in the value we all pay.
“It’s vital that consumers are supported and we’ve made suppliers transparent that we expect them to identify and offer to those who are suffering with their bills.
“We are also seeing the return of selection to the market, which is a positive sign and consumers can take advantage of a diversity of price lists available now that offer the security of a constant rate or a more flexible rate. be offering that is below the maximum price.
“People compare all the information, look for independent recommendations from trusted sources, and think about what’s most important to them, whether it’s the lowest value or the security of a consistent deal. “
Today’s announcement confirms plans to eliminate the “prepaid meter premium” so that prepaid consumers are charged the same ongoing rates as pre-authorized consumers.
Previously, consumers with prepaid meters had to pay more to cover additional costs.
In addition to its proposal to permanently eliminate the prepayment premium once government subsidies are removed in April, Ofgem also needs to reconsider how the prices of non-performing loans are distributed among consumers of popular loans (those who pay when they receive a monthly or quarterly bill). for a loan). the exact amount of energy used) and those paid by direct debit.
If all passed at once, the proposals would save prepaid consumers around £50 a year, popular credit charges around £45 a year, but save around £20 a year for direct debit consumers.
Ofgem will listen to the perspectives of all stakeholders on this proposal.
The value limit that will go into effect in April will be announced in February. Analyst Cornwall Insight predicts that the main limit will fall back to around £1,850 at the moment.
Ofgem, the energy market regulator, needs to know what others think about standing tariffs and how they can be replaced, writes Mark Hooson.
Energy consumers pay a steady payment to their suppliers as part of their bill, regardless of how much fuel or electricity they consume. Critics say this can have a deterrent effect when it comes to reducing consumption.
Under the existing energy price cap, consumers can be charged up to 53 pence per day for electricity and 30 pence per day for gas. A new limit will be announced in the coming days and will come into effect on January 1, 2024.
Analyst Cornwall Insight predicts that the energy value cap (currently £1,834 per year for a typical family paying by direct debit) will rise by 5% to £1,931 on January 1, 2024. It says the figure will be £1,853 for the second quarter of 2024 for the year, £1,824 for the third quarter and £1,863 for the fourth quarter.
It forecasts a sharp rise in electricity price lists from April (up to 61p a day from 53p) due to an overhaul of network price lists through Ofgem.
Fixed prices can be assimilated to renting a line under a telephone contract. Suppliers allocate the profits they generate to the infrastructure they use to supply energy.
Last month, figures from the Office for National Statistics showed that around 4 in 10 (39%) adults who pay their energy expenses said it was “very or difficult” to pay them.
Today, 16 November, energy regulator Ofgem is asking charities, customer groups, businesses, suppliers and payers for their perspectives on ongoing charges, and needs ideas on what they could be replaced with.
All interested parties, including bill payers, can email their perspectives to: StandingCharges@ofgem. gov. uk through Friday, January 19, 2024.
Tim Jarvis, head of markets at Ofgem, said: “We know that the current tariffs have caused a lot of debate in recent months and, with a wider burden of life pressures meaning consumers will continue to struggle with their bills, it’s a good time to take a look again.
Fixed-value lists are covered by the energy value limit, which limits the point at which suppliers can set them, but many still consider them unfair.
Fixed rates vary by region, with those in Merseyside and North Wales paying more than those in the South East of England. Energy consumers with prepaid meters have also traditionally paid higher ongoing rates than direct debit bill payers.
Prepaid consumers are currently subsidized through the government’s Energy Price Guarantee, but this will end in March 2024. Ofgem says it is running a replacement for this program.
While peak providers charge an ongoing fee, they are not required to do so. The few that don’t have constant charges, like Utilita, charge the unit charges for the energy they supply.
On the one hand, this means that consumers only pay for what they consume, but higher unit prices can disadvantage consumers who reduce their energy consumption, such as other people with disabilities, the elderly, and those who rely on medical equipment.
Jarvis said: “This is a complex factor, and while a steady upfront payment to cover a supplier’s constant prices works for some, it doesn’t work for others. Similarly, another price distribution may help some, but our previous research found that it can also penalize some highly vulnerable households.
“Whichever way we do it, there’s a tricky balance to strike, so it’s vital that as many other people as possible respond to our call for input by sharing their experiences, how it affects them, and what the opportunities might be. “. »
Ofgem’s research found that while the advent of energy based on the amount of energy supplied through consumers would benefit low-income families overall, a significant number of consumers could be worse off.
Their case studies show that around 1. 2 million low-income families with peak electric heating consumption would be worse off than those who would benefit.
Energy expenses will rise next year, according to analyst Cornwall Insight’s forecast of the regulator’s value limit, writes Candiece Cyrus.
The cap, which limits the amount suppliers can rate their consumers on constant prices and per unit of fuel and electricity they use, is set quarterly through Ofgem, based on wholesale energy prices.
Cornwall Insight predicts that the cap, which is adjusted quarterly, will increase in January from its current point of £1,834 consistent with the year to £1,923 consistent with the year (figures are for an average family consuming energy with a dual fuel tariff paid via debit). That’s higher than expected, £1,898 a year in September.
The analyst predicts that the cap will rise to £1,929 from a year earlier in April, fall to around £1,880 in July, and rise back up to around £1,917 in October, keeping it above its current point in 2024.
In September, the analyst predicted that the cap would fall below its current point from April next year, to £1,820, then to £1,781 in July before emerging to around £1,825 in the fourth quarter.
Cornwall Insight’s new forecast takes into account market volatility during the Israel-Hamas war, commercial activity at liquefied natural gas facilities in Australia, and damage to the BalticConnector pipeline in Finland.
Similar to Russia’s invasion of Ukraine, those occasions highlight the potential risk of disruption to the UK’s energy supply this winter due to falling temperatures.
National Grid ESO showed earlier this year that it would provide the Demand Flexibility Service this winter, giving families and businesses with smart meters the opportunity to take advantage of discounts on their electricity costs by using fewer peak energy hours.
The service is used when there is a risk of energy demand due to oversupply.
Dr Craig Lowrey, Senior Consultant at Cornwall Insight, said: “Price cap forecasts since September have highlighted the vulnerability of UK energy stocks (and visitor spending) to geopolitical developments.
“Russia’s invasion of Ukraine has shown that there is a delicate balance in the global energy market, which can be seamlessly disrupted by unforeseen events, and it turns out that the existing scenario is repeating itself.
“The government will need to take steps to proactively limit the effect such conditions have on the UK energy market and households already under pressure, rather than reacting to events as they occur. Stopgap measures such as social price lists and invoice cancellations are helpful, but they are not a long-term solution.
“While the UK will never be completely free from emerging global costs, reducing the country’s reliance on imported energy and prioritising locally sourced sustainable energy will help protect the country from foreign energy crises and stabilise costs over the next decade. “
Energy customers may see roughly £3 billion added to their expenses to cover the cost of customer cover when their suppliers went bankrupt in the 2021 electricity crisis, writes Candiece Cyrus.
The House of Commons Public Accounts Committee says around £2. 7 billion of taxpayers’ cash has been used to cover the charge of moving consumers from 28 failing businesses, in the hope that this cash will be recouped on energy bills.
But the Committee says that figure could exceed £2. 9 billion once the charge of rescuing 1. 5 million consumers from the biggest corporate bankruptcy, Bulb, is taken into account.
The Bulb case alone charges taxpayers a total of £3. 206 billion, and the government is only expected to collect £2. 96 billion from Octopus, which it acquired from Bulb consumers, and that figure depends on Octopus’s advertising success.
The Committee is concerned that the estimated deficit of £246 million could simply be borne by taxpayers at a time when household budgets are already under pressure due to the cost-of-living crisis.
The Committee added that some families who want to pay their expenses are not receiving it, stating that only 76% of the credit bonds that were issued to families with prepaid plans last winter have been repaid.
Some energy consumers said they had earned their vouchers.
Dame Meg Hillier, MP and chair of the committee, said: “Our report is a sad reminder that we are still living with the consequences of the bankruptcy of so many energy suppliers in 2021-2022. Even if the government and regulators have done so, the right thing to do is to act temporarily to protect consumers, but the uncomfortable fact remains: the recouping of this investment depends on the good fortune of a single company. The public cannot bear such uncertainty, especially in difficult economic times. “
An Ofgem spokesperson said: “Consumer protection is our most sensible priority and we have worked tirelessly with the government to implement measures to protect consumers from the effect of Bulb’s bankruptcy. Since then, we have taken a number of corporate measures to strengthen the resilience of the sector to reduce the risk of long-term service failures and limit the impact on consumers in the event of service problems.
“We can, and do, reject licensing programs from new energy corporations when we are unhappy that the organization is resilient enough to cope with the volatility of the existing energy market. We also ask organisations to assess their control and assurance frameworks for supply to Ofgem. .
Ofgem, the market regulator, will ask energy suppliers to contact their consumers if they fail to meet two monthly bills or a quarterly payment, to check if they are in monetary difficulties and, if so, offer support. affordable payment plan or a paid holiday, writes Candiece Cyrus.
In addition, providers will need to be available through touch methods (such as phone, email, or through the website), prioritize requests from other vulnerable individuals, such as seniors and others with disabilities, and offer informal contact methods. (like a loose phone number) for those who are struggling to pay their bills.
They will also be required to post Citizens Advice visitor service ratings on their websites to allow families to make informed decisions when making the switch. The ratings are updated quarterly and cover points such as call wait times, email reaction times, invoice accuracy, and complaint data.
The requirements, which came into force on Dec. 14, are part of an attempt by regulator Ofgem to set standards. They are the result of a consultation between Ofgem, customers, suppliers, consumer groups and charities in May.
Jonathan Brearley, director at Ofgem, said: “With recent global events increasing pressure on fuel prices, costs will most likely rise further. That’s why the industry wants to do everything in its power to provide smart service to visitors and provide debt control assistance. especially for the most vulnerable.
“Last year we saw smart examples of suppliers stepping up their efforts for their customers. However, despite this, the feeling of those working on the frontline with vulnerable families is that there is still much to be done.
“Long wait times to talk to someone on the phone. Unanswered letters. Lack of empathy for people’s personal situation. That wants to replace and today we lay out our expectations of suppliers this winter and what they’re going to look like. so that consumers can get them more easily. Especially for vulnerable customers, we expect more proactivity and a friendlier response.
Energy UK, which represents suppliers, has aligned with Ofgem and Citizens Advice to extend its voluntary debt commitment for winter 2023, outlining the tactics the 14 participating suppliers deserve from consumers (see update below).
However, Ofgem has also proposed a transience that increases energy expenses from April 2024 to prevent suppliers from going bankrupt, as visitor debt reached £2. 6 billion over the summer (see update below).
Households could face a one-off increase in their energy costs of up to £17 a year to prevent their suppliers from going bankrupt, writes Candiece Cyrus.
Regulator Ofgem proposed the move as part of a consultation on strategies to avoid the bankruptcy of suppliers due to visitor debt, which reached £2. 6bn this summer, its highest point on record.
In 2021, around thirty suppliers closed their doors because they did not want to pass on the increase in wholesale prices to their consumers on a sufficiently temporary basis. The burden of managing the move of its consumers to other businesses and maintaining the energy source added £82 to each of a household’s energy bills.
The crisis has also led Ofgem to make quarterly rather than semi-annual capitalization adjustments, making it more sensitive to wholesale price movements.
The transiency increase would apply with next April’s price cap and last for three months, adding around £1. 50 to a household’s average monthly expenditure (of £17 a year). The limit dictates the maximum amount providers can qualify. Consistent families with power unit and constant costs.
Such changes to the limit are allowed under their terms to allow providers to recover bad debts in a different way.
The limit has increased from £2,074 in the last quarter to its existing Q4 2023 point of £1,834 consistent with the year for a typical customer household, based on Ofgem’s downwardly revised average utilisation figures that it will refer to from this month in October. Based on their previous figures, the limit would be £1,923 a year for a typical household.
The cap is expected to return in January 2024 to £1,898 year-on-year and fall to £1,820 in April, according to analyst Cornwall Insight.
Unaffordable energy expenses prompted charities, activists and parliamentarians to send an open letter last month urging them to honour their commitment to introduce a subsidised “social” tariff for low-income families (see update below).
Tim Jarvis, managing director of markets at Ofgem, said: “We know that families across the country are suffering from wider cost-of-living issues, as well as energy, so any resolution to push prices up to the value limit is one we take lightly.
“However, the magnitude of bad debt and the potential threat of suppliers leaving the market or going bankrupt, which would pass on even higher prices to households, requires us to have all regulatory measures available. “
Dame Clare Moriarty, chief executive of the charity Citizens Advice, said: “Even before winter arrives, we are helping more people than ever who are unable to pay their energy bills. It is worrying that more and more families are going into debt for the supply of energy. warmer months, and some had to borrow cash to check and keep the lights on.
“The high prices of power mean that millions of people are at risk of falling in the coming months. An increase in the value limit to pay off higher debts will make expenses even more unaffordable. Any adjustment will have to be in the most productive interest of all consumers.
“For now, the government will have to supply more this winter to those most at risk. “
Energy UK, which represents suppliers, has also published the voluntary debt pledge for winter 2023, drawn up with Citizens Advice and Ofgem. It outlines the steps that 14 committed suppliers will take to supply, such as:
The corporations involved are British Gas, E, Ecotricity, EDF Energy, E. ON Next, Good Energy, Octopus, Ovo, Rebel Energy, Shell Energy Retail Limited, Scottish Power, So Energy, Utilita and Utility Warehouse.
With the energy market price cap set to be updated on Sunday, an open letter signed by 140 charities, activists and parliamentarians urges the government to deliver on its commitment to low-income families in the face of volatile energy prices by introducing a social tariff, writes Candiece Cyrus. .
The limit limits the amount suppliers can qualify families per unit of fuel and electric power, as well as related ongoing costs. Set quarterly, it will increase from £2,074 to £1,834 per year for a typical customer family from October 1 (see story below).
The new maximum level, which is based on Ofgem’s revised decline utilisation figures in place since October, and would be £1,923 a year for a typical household, based on its previous figures, is still the maximum in old terms. As recently as March 2022, the lower limit is £1,300.
Anti-poverty organisation National Energy Action, Age UK and Citizens Advice are among those calling on the government to help Americans “whose expenses are so unaffordable that they are forced to make a desperate choice that no one deserves to have to make: between heating and eating”.
The letter is signed by Independent MP Angus MacNeil, chair of the Energy Security and Net Zero Committee, and MP Ben Lake of Plaid Cymru, chair of the All-Party Parliamentary Group on Energy Poverty and Energy Efficiency.
MacNeil also criticized utilities for holding what he considers an excessive amount of their customers’ cash in the form of loans in their accounts. A BBC study found that businesses held £8 billion of their customers’ cash in the first quarter of the year.
Regarding the social tariff, the government committed in last year’s autumn statement to “expand a new technique to cover customers in energy markets, which will be applied from April 2024” and to “work with customer and industry teams to reflect on the technique. . , adding functionalities such as social rates.
A social tariff has been established to make it easier for those who suffer to pay their bills. Water, broadband and telephone companies already offer this type of tariff, but none has yet been introduced for electricity customers.
To be eligible, a user will need to obtain secure means-tested benefits, such as Universal Credit or Pension Credit, or suffer from a chronic illness that requires above-average energy consumption.
The campaigning organisation says UK households now owe £2. 25 billion for their energy costs, an increase of more than 70% in the last three years.
The energy price cap, which determines how much suppliers can qualify families per unit of fuel and electric power and related ongoing costs, will be lowered for a consecutive quarter on Sunday, Oct. 1, writes Candiece Cyrus.
The cap, set every three months by market regulator Ofgem to reflect changes in wholesale energy prices, will be £1,834 a year until December 31. This is less than £2,074 a year in the three months to October.
It is based on the typical electricity consumption of a dual-tariff family, paid by direct debit, according to Ofgem’s revised average consumption decrease figures, which the regulator will refer to from next month. be £1,923 a year for a typical family. Ofgem is also reducing the value limits that apply to energy consumers who pay through other methods.
The limit does not restrict the amount of a household’s bill, which is determined through the amount of energy it consumes. Invoices also vary depending on the customer’s location, reflecting the sourcing charge in a specific region.
Activists have expressed fears that the cap relief itself will be accompanied by relief in the constant prices that are added to all bills. The value of fuel is rising by between a penny and 30p per day on average.
Because those tariffs are constant and universally applied, they gain advantages by reducing consumption.
According to Ofgem, the price cap update will bring the average dual fuel bill below £2000 for the first time since April 2022. At the time, it amounted to £1971 a year. The regulator says the cap, at its current level, will save families an average of £151 over the last quarter.
However, this winter there will be no government to adjust the £400 paid in instalments to all families between October 2022 and March 2023, when spending was limited to £2,500. This means that consumers will derive little benefit from cap relief.
Ofgem’s revised average energy consumption figures, which will come into effect on 1 October, take into account a relief in average household energy consumption as a result of others using less energy to save money, as well as the long-term effect on improving the power of appliances and greater insulation of buildings.
The regulator found that the average household now consumes 2,700 kWh of electricity and 11,500 kWh of fuel per year, up to 2,900 kWh and 12,000 kWh respectively.
Based on the new figures, analyst Cornwall Insight predicts that the cap will fall to around £1,898 consistently with the year in January next year before falling back to around £1,820 in April. The cap is expected to fall further to £1,781 in July before emerging. to around £1,825 in the final quarter of the year.
However, if existing average energy consumption figures were to hold, the cap would rise by 3. 5% to £1996 compared to the year in January 2024, before falling to £1912 in April and £1872 in July before returning to £1922 compared to the year in 2024. . October.
As wholesale energy costs fell and stabilized, suppliers began offering steady deals again. These tariffs, which guarantee energy consumers a consistent rate consistent with the unit of energy, for 12 months, have been largely absent from the open market for more than a year due to elevated and volatile costs.
While constant price lists protect families from price increases over time, families could end up paying more than the limit if prices fall. The offers come with “exit penalties” designed to discourage consumers from leaving early. They can charge £75 or more depending on fuel.
The table below shows some of the consistent rates that can be obtained lately from primary providers.
E. on Next offers a tariff that follows the energy value limit. The value of the E. on Next Pledge will still be around £50 below the cap, meaning it will be around £1,870 from October. The value will be updated every three months to reflect movements in the energy value limit.
Customers will need to pay £25 for fuel to make the transaction more than 42 days before the end of the term (all constant fees will need to offer this payment for free as the end of the term approaches). . The fee will apply to existing consumers who pay by direct debit.
A cross-party committee of MPs has called on the government, electricity regulator Ofgem and suppliers to do more for families this winter, writes Candiece Cyrus.
The Net Zero and Energy Security Committee’s winterisation report suggests measures that the government, Ofgem and suppliers can take for families in time for the colder months ahead.
According to the Committee, 6. 6 million families are in energy poverty, meaning they have to spend 10% or more of their source of income on energy, up from 4. 5 million in 2021.
The report recommends that the government extend the Warm Home Discount scheme, which offers low-income families and those in energy poverty or at risk of energy poverty a payment of £150 during the winter.
Since 2021, energy consumers can only earn benefits from the program if they earn secure benefits, tax credits, or means-tested pension credits and if they live in an asset with a maximum energy load score, as decided through the scoring workplace. agency.
The committee suggests expanding the plan to other people with disabilities, seniors, people with chronic illnesses and people with low incomes who would otherwise not be eligible.
It also calls on the government to ensure that families who last winter did not get advantages from government energy bill bills totalling £400 because they didn’t get vouchers, for example, get their bills promptly.
Other measures include speeding up the implementation of smart meters and redesigning the payment scheme for current tariffs that will be based on the amount of energy consumed by a household. Currently, the tariff, which covers the charge of a supplier supplying power to a property, among other operating fees, is set in the form of a tariff.
Smart meters allow families to monitor the energy they use and identify spaces where consumption can be reduced. The meters also provide real-time insights to providers, for more accurate billing.
The report also suggests that the government work with suppliers to create a “social” tariff to help others in energy poverty, and that Ofgem and energy suppliers adopt a more proactive approach to improving industry standards.
This would involve offering a priority phone line for customer organisations and charities to provide assistance on behalf of their customers.
Ofgem should also require that all customers, especially those in energy poverty, receive continuous care from their supplier. This includes guidance to identify where they are eligible for MonetaryArray.
MP Angus Brendan MacNeil, chair of the Energy Security and Net Zero Committee, said: “As the nights approach, many of our highs will be haunted by harrowing memories of the relentless sacrifices they were forced to make over the past year, just to keep their heads afloat in the face of sky-high energy costs.
“While monetary aid will be vital, there will also be a need to drastically improve visitor service and the empathy that energy corporations show towards those who are going through difficult times. If those companies don’t, Array Ofgem wants to be less behind and give them a smart push to make sure they work to the best interests of their consumers this winter.
In addition, Prime Minister Rishi Sunak abolished his Energy Efficiency Task Force six months after its creation.
The aim of the 15-member group is to reduce the UK’s overall energy demand by 15% from 2021 to 2030, in advertising processes and domestic and advertising real estate. Their work included speeding up the installation of insulation in less energy-efficient homes and upgrading boilers.
Sunak’s resolution builds on an announcement last week showing the postponement of the phase-out of fuel boilers and the postponement of the ban on the sale of new petrol and diesel cars from 2030 to 2035.
Energy consumers with lower municipal tax brackets who live in less energy-efficient homes can now apply for government help insulating their homes and save money on their energy bills, Cyrus writes.
Previously, these plans were only available to those receiving certain state benefits, but to be eligible for the Great British Isolation Plan, families only need:
According to the government, 47% of UK families had a grade D certificate or lower in 2022.
Applications can be sent to gov. uk. The procedure consists of answering questions about the type of house and the newly existing insulation, as well as the main points of the EPC and family income.
This figure will be used to determine whether the family will be asked to make a contribution to the project’s expenses. The procedure asks whether the family’s source of income is above or below £31,000 per year, implying that those with a source of income above this point may be asked to pay up to 10% of the charge.
Anyone who has an EPC will get it from their energy provider, who will assign a licensed installer to assess the assets and propose the appropriate maximum course of action.
Unlike other “whole house” energy enhancement initiatives, the Great British Insulation Plan only offers one form of insulation improvement, such as attic insulation or hollow space wall insulation, but both.
Work can only continue if the owner complies with the proposal and meets the monetary contribution requirements.
The government says the 300,000 families eligible for the scheme could save up to £400 a year on their energy bills.
The program will run in conjunction with the Energy Company Obligation (ECO) program, which provides free home power upgrades, adding heat pumps, solar panels, and insulation, to low-income families.
The government has also introduced an online eligibility checker for the Home Renovation Grant. The grant helps homes that are not connected to the fuel grid to control their electrical power if they have a D to G electrical functionality certificate. According to the government, 25,000 homes are eligible.
Providers will no longer have to forcibly install prepaid meters in the homes of other people who pay their energy costs and who are over the age of 75 and living without assistance or with children under the age of two, writes Candiece Cyrus.
Lately, the no-installation rule only applies to energy consumers over the age of 85 and those with serious physical conditions, adding consumers with a terminal illness or an illness that requires a warm home.
The extended rules, announced through regulator Ofgem, will come into force on November 8 and expand the scope of the voluntary code of practice introduced in April, which all energy suppliers have agreed to abide by.
The Code also requires providers to attempt to touch a visitor at least 10 times before installing a prepaid meter. Providers also refrain from installing such meters in the homes of those who want a constant source of power due to their health, and those who are unable to recharge their meters due to intellectual or physical disability.
Vendor representatives stop at a scale point to check for vulnerabilities before deciding to install a prepaid meter, and use an audio device or camera to monitor the procedure of any vulnerability check or installation of a prepaid meter.
If a meter is installed, the supplier will need to obtain £30 credits to lessen the threat of a visitor wasting the fountain due to a lack of means to refuel. Vendors will also have to think again about records once the visitor has paid off the debt they owed.
Currently, no vendor performs unintentional installations. During the 56-day implementation period through Nov. 8, providers will have to identify where they have incorrectly installed involuntary prepaid meters and offer affected consumers a refund and a non-prepaid payment method, before they can restart involuntary prepaid meter installations.
They will also need to provide Ofgem with knowledge about their inadvertent installations.
Code Ofgem’s reaction to reports that suppliers such as British Gas were illegally installing forced prepaid meters in the homes of “vulnerable” customers, including the elderly, who were struggling to pay their electricity bills.
From 8 November, if suppliers break the rules, they will face “severe penalties”, although Ofgem has not revealed what it is.
Neil Kenward, Chief Strategy Officer at Ofgem, said: “Prepaid meters are a payment method that is helping millions of families manage their energy bills, but they are not suitable for everyone.
“Today’s strengthened regulations aim to ensure determined coverage against malpractice, while ensuring that, where necessary and as a last resort, providers use facilities unintentionally and responsibly. “
Louise Rubin, head of policy at disability charity Scope, said: “The newly defined regulations are a welcome improvement, but they don’t go far enough. There’s no guarantee that a disabled family won’t face a forced installation of PPM this winter.
“We are disappointed that Ofgem has not gone further and banned forced meter installation and remote switching for all other people with disabilities. “
Compensation for families and businesses that lose power due to extreme weather events has nearly tripled, Cyrus writes.
The maximum energy rebate consumers can get due to severe storms will be £2,000, from £700, under new regulations put in place through Ofgem, the energy regulator.
It follows his review of how distribution network operators responded to storm Arwen in November 2021, in which around 40,000 consumers across Britain forced force for 3 days and almost 4,000 for more than a week.
Six major grid operators, plus UK Power Networks and National Grid Electricity Distribution, are responsible for connecting homes and businesses to the electricity grid.
Ofgem’s adjustments also lead to an increase in advance bills from £70 to £80. These adjustments will be made if strength cannot be restored after 24 hours for a Category 1 storm, or after 48 hours for a Category 2 storm. Previously, the initial bills only applied if power was not restored after 48 hours, regardless of the type of storm.
The typhoon category for these purposes is explained by its effect on the energy grid.
The adjustments made through Ofgem also include reducing the waiting time for consumers to get an additional refund from 12 to six hours, payment of the refund via bank transfer, and a new mechanism that will adjust bills to inflation.
Ofgem says the adjustments mean more consumers will be entitled to higher degrees of reimbursement if they pass without force for long periods of time. Network operators who fail to comply with those regulations can face fines of millions of pounds.
Akshay Kaul, Ofgem’s managing director of infrastructure, said: “It is unacceptable that thousands of homes are left without power in freezing situations for an extended period during Storm Arwen, with incorrect data on when their power would be restored.
“Many have also struggled to get the refund they were entitled to afterwards, and that’s why we’ve put in place new, stricter rules. “
Kaul added that while “lessons have been learned,” the frequency of extreme weather events will only increase and the grid will need to be resilient.
Octopus Energy has agreed to buy Shell’s domestic power in the UK and Germany.
The move will add 1. 4 million households to Octopus’ books, expanding its success to approximately 6. 5 million households in the UK. The agreement also includes the adoption of 500,000 broadband customers.
Following regulatory approval, the move is expected to be finalized by the end of this year, at which point Shell will communicate with consumers to learn about next steps.
Octopus said that “there will be a smooth transition and there will be no disruptions in customers’ power supply. “He added that “customers’ credit balances will be transferred and automatically transferred to their new account. “
The deal will make Octopus the UK’s second-largest energy supplier, Centrica-owned British Gas, which has around 7. 4 million domestic customers.
The energy price cap, set quarterly by regulator Ofgem, will rise from £2,074 a year for a typical customer household paying by direct debit to £1,923 from 1 October.
For families with a prepaid meter, the limit will be £1,949, up from £2,077. The average bill for those paying by other means, such as cheque or cash, will rise from £2,211 to £2,052.
It is the first time since September last year that the main limit will be below £2,000. In March 2022 it stood at £1,277, meaning it will still be almost 50% higher than it was 18 months ago.
The limit limits the amount energy providers can qualify for each unit of fuel and electric power, as well as related ongoing costs. This is not a limit to actual bills, which are decided based on the amount of energy consumed.
Ofgem sets the cap in reference to wholesale energy prices, which have fallen in recent months as the market has adapted to the situation resulting from Russia’s invasion of Ukraine. However, market analyst Cornwall Insight warned that the cap could only be reached in January if the risk of a strike at liquefied natural fuel facilities in Australia continues and disrupts agreements with foreign sources.
Several electric utilities began offering fixed-rate, fixed-term energy price lists as prices fell. These price lists were virtually absent from the free market over the past year due to price volatility.
The energy solution promises you a guaranteed rate per unit of energy, regularly for 12 months and regularly at a price close to the current maximum value. This protects you if prices rise, but it could leave you with a valuable source if prices fall.
Although costs are expected to rise again in early 2024, they are expected to come down in the second and third quarters of the year. But this will depend on the maintenance of economic and geopolitical stability, as well as the harshness of the situation. next winter, it will demand.
Customers wondering whether or not to repair need to weigh those uncertainties against the benefits of pricing and budget certainty for the duration of the solution. Anyone wishing to terminate a constant rate agreement, the term will usually face an exit penalty. , normally set at £30 per fuel or more.
The even higher value of the domestic energy source is probably due to renewed calls for the arrival of a social tariff to reduce the expenses of other people in a situation of energy poverty, i. e. a disproportionate percentage of household income is absorbed through energy costs.
Energy corporations and Ofgem, as well as charities and anti-poverty activists, have subsidised the arrival of such a tariff, but the government has refused to give the green light to such a proposal, which would require investment from other taxpayers or public funds.
From October, Ofgem presents new figures that reflect its estimate of average household consumption. This will reflect that families use less energy at the checkout to save money and take advantage of the increased power of appliances.
Currently, the typical annual intake is 12,000 kWh of fuel and 2,900 kWh of electricity. Here are the figures used for today’s limit announcement.
From October, Ofgem will use discounted figures of 11,500 kWh for fuel and 2,700 kWh for electricity, which will be on the ceiling valid for the first time from January 1 to March 31, 2024.
Market analyst Cornwall Insight has published its estimates of long-term energy price caps, set quarterly by Ofgem, the regulator.
The cap, which reflects wholesale energy costs, limits the amount energy corporations can qualify per unit of fuel and electric power used, as well as related ongoing rates; It’s not a limit on actual invoices.
The existing cap, which came into effect on July 1, is £2,074 per year for an average household with a dual fuel fee paid via direct debit.
This is a sharp drop from previous versions of the cap and its transitory replacement, the guarantee of the value of government power and the drop cited by the Office for National Statistics last Wednesday as an explanation for the sharp drop in inflation in July to 6. 8% (from 7. 9% in June).
Average consumption is explained as the consumption of 12,000 kWh of fuel and 2,900 kWh of electrical energy per year. However, from October, Ofgem will use lower figures to reflect that average household consumption has decreased thanks to a combination of energy savings. of consumers looking to reduce their spending and innovations in the power of many family appliances.
The new figures will be 11,500 kWh for fuel and 2,700 kWh for electricity. To constitute this change, Cornwall has published two sets of figures showing the basis of the calculation.
Using existing intake figures, the October limit is estimated at £1,926. With lower intake averages in play, Cornwall says it will amount to £1,824. Ofgem will verify this figure on August 25.
It should be noted that the new calculation basis does not in itself imply a reduction in energy prices: it reflects assumptions about the amount of energy a typical household consumes.
In the long term, Cornwall says the January 2024 cap will rise particularly (£2,083 under the old base, £1,980 under the new), largely due to the risk of a strike at liquefied vegetable fuel facilities in Australia, which would risk driving up wholesale prices.
For the second quarter of 2024, the figures are £2,015/£1,915 and for the third quarter they are £1,965/£1,867. It is sometimes accepted that forecasts are less reliable the more future they are, precisely because of geopolitical reasons and economic uncertainties and the effect of weather conditions on demand.
Commenting on the new estimates, Craig Lowrey of Cornwall Insight said: “While a slight reduction in October spending is welcome, we are again seeing energy price forecasts well above pre-crisis levels, highlighting the limitations of price capping as a tool for households. “with your energy expenses.
“As many have acknowledged, it’s about the government exploring alternative solutions, such as social tariffs, to ensure stability and affordability for consumers. “
Energy market analyst Cornwall Insight expects Ofgem’s value limit to fall more than expected when it was revised in October, writes Candiece Cyrus.
The limit is adjusted quarterly to reflect adjustments in wholesale prices. In early July, Cornwall said the cap, which is currently £2,074 a year for households with typical consumption, would fall to £1,878 by the fourth quarter. Now he says he will succeed at £1,861.
However, the analyst has revised upwards his estimate for the first quarter of next year from £1,917 to £1,959. Similarly, the estimate for April-June 2024 has increased from £1,888 to £1,917.
Cornwall also released its first estimate for the third quarter of next year, which shows a drop to £1,870, more than £200 less than currently.
Regulator Ofgem has drawn up a list of proposals to supply power to families and businesses, writes Candiece Cyrus.
This includes extended opening hours for families and increased complaint control for business customers.
Ofgem said its proposals would “set expectations” for all consumers to get a “consistent and appropriate point of service, regardless of the company they work with. “
For households, it offers power companies:
For companies, the regulator reviews the demanding situations that arise in the market and will deal with:
The regulator also set the level of capital that energy suppliers will need to have in order to cope with market shocks following the bankruptcy of 30 companies in reaction to emerging wholesale costs in 2021/22.
Ofgem is also proposing to give it the power to order suppliers to reserve a portion of their customers’ credit balances if it is in the consumer’s interest to do so.
A statutory consultation on national admission criteria will close on 23 August 2023. A decision on the national admission criteria is expected in early October.
Ofgem proposes to have many of these requirements available until December 2023 to help protect and assist consumers through the winter.
The proposals for the non-national review will undergo legal consultation in autumn 2023 and any licence modifications are expected to be implemented in the winter of 2023/24.
Regulator Ofgem is warning families to think twice before switching to a constant rate rate rate after such offers returned in recent weeks since the revised price cap came into effect on July 1, writes Candiece Cyrus.
His message matches data from analyst Cornwall Insight, which shows that switching to any of the new constant rates will result in savings in energy expenses over the next 12 months.
Suppliers have introduced price lists close to the annual limit of £2,074 for typical customer families (see update below) following the fall in wholesale energy prices.
Ofgem tweeted today: “Fixed energy price lists have noticed a comeback in the market, but check if they are right for you. Prices are still unpredictable and signing up for a consistent rate now can mean missing out if costs drop in the future.
Fixed-value lists allow energy consumers to benefit from a constant value per unit of power, for 12 or 24 months. This can make it easier for them to manage their finances than those with a popular variable rate (SVR).
Ofgem’s limit limits the amount that suppliers can rate consumers according to the power unit and as prevailing rates in an SVR tariff, with updates based on the fluctuation of wholesale costs made quarterly. There is no limit to the expenses themselves, which reflect the amount of energy consumed.
Most families are reaping benefits from SVR price lists after suppliers removed their constant price lists from the market as wholesale energy costs began to skyrocket due to Russia’s invasion of Ukraine.
Households with constant price lists would likely pay less than SVR consumers if wholesale costs increase the term of the contract, or pay more if they fall.
Cornwall Insight reports that those who signed up for the cheapest consistent offer available earlier this month (Utility Warehouse’s Fixed Saver, priced at £1,974 per year for typical use) will likely pay the same as an SVR visitor over the next 12 years. months. .
The analyst’s calculations are based on the existing upper cap (£2,074) and its most recent guidance for the next 3 quarters, which amounts to:
James Mabey, an analyst at Cornwall Insight, said: “The pushback in energy problem-solving has captured the country’s attention in recent months as many families seek stronger, lower-cost energy contracts.
“Based on our current forecasts, consumers will lose out by agreeing to a one-year consistent contract. However, those contracts should generate significant savings, if anything.
“While monetary gains from the adoption of domestic constant price lists are ultimately limited, they provide a sense of security to consumers in the context of recent volatility in the energy market. Households’ preference for solid costs may simply increase the number of other people who subscribe to consistent offers.
Energy EDF offers new and existing consumers a 12-month flat rate on fuel and electricity set at £2,100 for an average family with typical energy use, writes Candiece Cyrus.
This compares to the energy regulator Ofgem’s energy value limit for default variable rate tariffs, which stands at £2,074 per year for the average family with typical energy use.
Actual bills, regardless of tariff, are determined by the amount of energy consumed.
EDF’s July 24 Exclusive Essentials offer is aimed at families who use a smart meter or want to have one installed when they sign up for the tariff. A dual energy (gas and electricity) payment of £150 is charged if a visitor leaves the Early Rate.
Exit fees are charged up to 42 days before the end of a transaction’s term.
EDF’s be offer is in addition to a limited number of constant 12-month be offers that have been on the market lately:
The new deal with EDF shows signs that the energy market could stabilize after Russia’s invasion of Ukraine and upcoming sanctions on its energy exports, which led to a surge in global wholesale prices.
As a result, vendors withdrew their consistent offerings from the market. Now, maximum offers on the market are still within reach of existing consumers from providers.
Most consumers now benefit from popular sliding rate rates. The energy value limit dictates the maximum amount suppliers can rate their customers per unit of energy on this type of tariff, based on wholesale prices. This limit is updated quarterly.
On July 1, it rose from £3,280 to £2,074 a year for a typical household, but energy consumers still face expenses above old levels. Ofgem’s limit was around £1300 in March 2022 and was still below £2000 the following September.
Fixed price lists oblige energy consumers to an agreement for a consistent period of time: 12 or 24 months. They can be especially helpful for families who need to budget with certainty.
However, if wholesale prices fall during the transaction, consumers with a constant rate would likely find themselves paying more per unit of power than those with a popular rate.
Neither the cap nor constant prices restrict a household’s bills, which are decided through the amount of energy it uses. Only the unit rate and related constant prices are capped.
The latest predictions from analyst Cornwall Insight suggest that the Ofgem limit will be updated as follows, for an average family per year:
However, wholesale costs are threatened by geopolitical upheavals, such as a new standoff in Ukraine, which explains the increased interest in fixed-rate offerings.
Elon Musk, owner of electric vehicle maker Tesla, is reportedly set to launch a renewable energy electric power company, Tesla Electric, in the UK, writes Candiece Cyrus.
Proof of this resolve is a task that will be offered to an operations manager in London on the business-oriented social media platform LinkedIn.
Currently, the company operates in Texas and is aimed at “accelerating the transition to sustainable energy. “
Its main tool for achieving this is its home electric battery product, Powerwall, which allows families with solar panels to sell their excess electrical power back to the grid when wholesale costs are high.
This leads to credits that are added to the home energy bill, allowing them to save money on bills in the long run. The precise details of how the service will work in the UK are yet to be revealed.
However, UK energy suppliers participating in the government’s Smart Export Garantie (SEG) scheme allow their consumers to sell their electricity back to the grid. Households are subject to a SEG tariff and are paid for the unit of energy they return. A SEG provider is likely to be different from the company that embodies the power of the home.
The amount a family can earn will depend on several factors, adding up their location, their express rate, and the location of their solar panels.
According to Energy Saving’s Trust Solar Energy calculator, a family in London can save £298 a year on their expenses thanks to solar energy.
The Powerwall also offers solar power that can be used in power outages or when the sun isn’t shining, and provides “intuitive” charging of the vehicle. This includes detecting when power is needed indoors or when there is a power cut and deceleration, or thus preventing the car from charging.
Tesla’s website claims that Powerwall also charges an electric vehicle with excess solar power if plugged in while the sun is shining. The accompanying app allows users to distribute force between their assets and their vehicle. A Powerwall unit costs around £8,900.
Tesla Electric’s expansion comes as the U. K. aims to ban the sale of new internal combustion engine cars until 2030 and the prestige of net-zero carbon emissions until 2050.
In its project post, Tesla Electric states, “Tesla Electric is Tesla’s electric power retail offering, which is currently available to owners of Tesla products in select global markets, such as Texas.
“Providing a seamless and undeniable experience for visitors will ensure that small-scale residential flexibility can be fully applied to the transition of the entire electricity grid to 100% renewable energy.
Households and businesses with smart meters in England, Scotland and Wales could once again benefit from discounts on their electricity costs by using fewer peak power hours this winter, writes Candiece Cyrus.
This opportunity will be presented to consumers of suppliers who provide the flexibility call service when there is a risk of energy demand due to oversupply. Participants will be required to use smart meters that can send readings to providers every 30 minutes.
Customers who don’t have an attractive supplier can simply use an independent company to extract the necessary data from their meter application.
We will update this page with the corporations that will be there this winter once the data is available.
According to National Grid ESO, which monitored the service between November 2022 and March 2023, around 1. 6 million homes participated, reducing electricity consumption by 3,300 megawatt hours during 22 peak periods.
Participating families were contacted through their suppliers prior to expected peak periods of energy demand (usually after the afternoon or early evening Monday through Friday) so that they could regulate their electricity use.
The grid said families can save between £3 and £6 per kilowatt-hour of unused energy during the peak of the year, although the exact amount is decided through each provider.
Consultation is underway on the final situations for this winter.
According to the results of a survey of approximately 24,000 participants, 62% were satisfied with their experience and 83% would participate again. The majority of respondents (85%) found out about the service through their provider (multiple responses were allowed).
When asked what their main motivations were for participating, 76% of respondents said it was the monetary benefit, 41% discussed the challenge, and 37% said their motivation was balancing the network or “keeping the lights on. “
When asked about the main benefits of participating, 42% cited the satisfaction of effectively completing the challenge, 39% said they earned rewards, and 38% said it was part of a national collective effort.
However, some demographics were underrepresented, such as younger age groups, low-income households, renters, and urban residents. The network said participation would be monitored to perceive inequalities in access to offerings through the service and differences in participation outcomes.
National Grid ESO introduced the Abatement Service as a solution to the need for forced power cuts if the force requires an outrun supply, due to Russia’s invasion of Ukraine.
The resulting sanctions on Russian fuel exports have threatened Europe’s fuel supply. The grid operator said there were “ongoing dangers and uncertainties similar to Russia’s invasion of Ukraine” this winter.
Through their regulator Ofgem, energy corporations are being warned to preserve their profits before paying dividends to shareholders to remain financially resilient in a volatile market, writes Candiece Cyrus.
Financial instability contributed to the closure of 30 suppliers in 2021/22, when wholesale energy rates began to skyrocket. The charge of moving consumers to other providers will be covered by deductions from consumers’ bills.
The taxpayer also took responsibility for supporting the Bulb company, which he deemed too big to file for bankruptcy, before selling it to Octopus last December.
Ofgem sees monetary rigor in the control of power corporations as wholesale costs fall and profitability returns to the market after five years of losses.
The regulator said it expects to “act responsibly and in the interests of its customers. “
The government also wants to see households benefit from lower wholesale prices, which is reflected in the latest update to Ofgem’s energy value limit. On Saturday, it rose from £3,280 a year for an average family to £2,074 a year (see story below).
However, the effective cut is £2,500 per year, and the cap is temporarily replaced by the government’s energy value guarantee.
Analyst Cornwall Insight has released cut-off forecasts for the fourth quarter of 2023 and the first part of 2024. It says the cap will increase from £2074 to £1878 on October 1 before rising to £1917 on January 1, 2024. The estimate for 1 April 2024 is £1,888. The limits from October 2023 are based on a relief in the annual average consumption figures published through Ofgem last week (see article below). As always, the actual expenses are not limited and will be decided based on the volumes of energy consumed.
Due to declining energy prices, industry analysts expect suppliers to once again offer competitive energy supplies in the coming weeks and months.
In a letter to suppliers this morning, Jonathan Brearley, chief executive of Ofgem, also said the regulator would continue to review and update the value limit. It’s also considering a borderline option that would appeal to larger consumers in volatile market conditions.
Permanent measures are planned to ensure that families with prepaid plans do not pay more than consumers by direct debit. Prepaid customers historically pay more, due to the higher administrative fees required to offer this payment method.
However, since July 1, the government has stepped in to cover the price difference for prepaid meter consumers and direct debit consumers, although this help is expected to last until April 2024.
The regulator is also:
Vulnerable customers include seniors, other people with disabilities, and young children. The regulator introduced a voluntary code of practice in April, which all suppliers signed up. This follows reports that British Gas has breached Ofgem regulations and forcibly installed meters. in the homes of vulnerable customers. Last week, Ofgem announced a legal consultation to make the Code of Practice mandatory.
Brearley said: “An energy sector in which corporations can make moderate profits is vital to creating a sustainable and competitive market for consumers. However, returning to the practices we saw before the energy crisis is not on the agenda: suppliers want to reciprocate The sector gained from consumers and taxpayers when wholesale costs rose, behaving responsibly in the face of falling costs and supporting profits.
“The energy market has changed. Ofgem has made fundamental adjustments to the market and we want suppliers to be informed about the energy crisis and play their part in ensuring they are financially sound, able to absorb potential losses and meet our new capital requirements. I don’t expect to pay dividends again until a supplier has met those capital requirements.
“We will monitor the situation closely, adding that the market operates competitively in terms of price, visitor service and cutting-edge products, and that suppliers meet their obligations to the maximum of the vulnerable. “
Today we are witnessing the long-awaited reduction of the energy value limit, which governs how much consumers can be charged per unit of energy they use, as well as the related constant tariffs.
Set by the market regulator, Ofgem, the cap is now £2,074. This is the amount a family would pay per year if they were fueled by an average amount of fuel and electricity and paid their overdue expenses by monthly direct debit.
The cap does not restrict the number of bills we take into account through actual consumption. The cap point serves as an indicator of the prices that a typical household is likely to bear.
The maximum value is revised quarterly to reflect changes in wholesale energy prices. The previous cap, which came into effect on April 1, was £3280.
However, since October last year, the cap has been replaced through the Government’s Energy Price Guarantee, which calculated the typical annual bill at £2,500. The guarantee came when it became transparent that rising wholesale costs would push the cap beyond £3,500.
As of today, the cap is back in effect, resulting in relief in the government’s £426 guarantee consistent with the year. The guarantee will come into play if the limit exceeds £3,000. Analysts expect the cap to fall below £2,000 at its next review on Oct. 1.
Separate limits apply to those who pay late by check or money and those with prepaid meters.
For check and cash customers, the limit has been increased from £3,482 to £2,211 for typical dual-fuel consumption. The additional prices reflect the higher costs incurred by electric companies to manage those payment methods.
For prepaid consumers, the limit has increased from £3,325 to £2,077 for typical dual-fuel consumption, bringing it closer to the level of the main limit. The government has insisted that the premium in the past was paid through prepaid consumers – again, to cover administrative costs. Pricing: We will get rid of the existing maximum level.
Many prepaid consumers are financially vulnerable.
Ofgem defines the average annual household consumption as 2,900 kWh of electricity and 12,000 kWh of gas. Starting in October, those figures will be set at 2,700 kWh of electricity and 11,500 kWh of gas, reflecting the degrees of consumption as economically suffering families consume and locate tactics to become more energy efficient.
This replacement will replace the indexed figure for the cap, but, as noted, it doesn’t necessarily mean that expenses will fall at the same rate. Households will continue to be billed for the energy consumed, albeit with lower unit rates and constant rates.
From 1 July, the unit point of the value limit, to the nearest cent, for a typical visitor paying by direct debit, will be 30 pence per kWh for electricity consumers and a constant rate of 53 pence per day.
The unit per unit for a typical fuel visitor is 8 pence per kWh with a constant rate of 29 pence per day.
Analyst Cornwall Insight estimates that, based on new average consumption figures for October, the cap will fall to £1,871 consistent with the year for a dual-energy home with typical consumption when it reboots. That’s £107 less than their previous forecast of £1,978.
It also expects the cap to be around £1,901 per year for a typical family in January 2024, shaving £103 off its last forecast of £2,004 per year, due to relief in the average income figure.
Analyst Cornwall Insight says the energy price cap, set by regulator Ofgem to limit household spending, is expected to fall to a lower-than-expected point in October this year and January 2024, writes Candiece Cyrus.
The revision is the result of adjustments Ofgem has made to the way it calculates typical power consumption. He says families are consuming less fuel and electricity due to high costs and greater energy efficiency, and consumption figures want to be reduced accordingly.
The limit refers to the annual bill that an average family can expect to pay. Previously, it was calculated on a consumption of 2,900 kWh of electricity and 12,000 kWh of gas. These figures have been revised downwards to 2,700 kWh and 11,500 kW.
However, that does mean that the expenses themselves will change. Ofgem has made adjustments to the unit load of fuel or electricity, or to constant tariffs, so families will continue to pay for the energy they consume as they do now.
From July 1, the cap will be £2,074, a figure lower than the £2,500 energy value guarantee imposed by the government since last October, when the cap exceeded £3,500.
Cornwall Insight predicts the cap will fall to £1,871 consistently with the year for a dual-energy home, with typical energy consumption, when it resets in October. That’s £107 less than their previous forecast of £1,978.
It predicts the cap will rise to around £1,901 per year for an average family in January 2024, cutting its most recent forecast from £2,004 per year to £103.
Dr Craig Lowrey, Senior Consultant at Cornwall Insight, said: “The lowering of the average value limit forecast reflects Ofgem’s efforts to align with the conversion of energy consumption patterns for typical households, as consumers respond to higher values, energy power measures, weather and other influences through cutbacks. your energy use.
“While typical family forecasts might provide some insight to clients, families still face the challenge of spending well above old levels. This brings us back to the question of the goal of the cap, as doubts about the effectiveness of the cap on customer coverage and its effect on party value have become a normal feature of discussions about power.
Analyst Cornwall Insight predicts that the value cap governing annual household energy expenditures will fall to £1,933 for those with typical consumption in October before rising to £1,944 in January 2024. The cap will last below £2,000 in September 2022.
At present, the cap, calculated quarterly through regulator Ofgem, stands at £3,280, after reaching £3,550 in October 2022 and peaking at £4,279 in January this year.
The immediate increase in the cap prompted the government to introduce its Energy Price Guarantee (EPG), which has capped the average household consumption bill at £2500 per year since October 2022.
This guarantee will cease to apply from 1 July, when the Ofgem limit will increase from £3280 to £2074.
The cap is falling due to a drop in wholesale prices, which in turn have declined as power corporations have turned to select sources of resources that were disrupted or “suffocated” by the conflict in Ukraine and sanctions related to Russian fuel and oil.
Market watchers believe the reduced cap will prompt some suppliers to reintroduce fixed-price tariffs, which have been almost completely absent from the market for the past 18 months due to skyrocketing wholesale prices.
Fixed power contracts, usually for a term of 12 or 24 months, depend on the supplier’s ability to purchase fuel at a guaranteed price during the term. They set the value per unit of fuel and electrical energy for the customer, but the actual expenses are determined through the amount of energy used.
The merit of the solution is that the visitor benefits from the emerging costs while the solution is in place.
However, if the daily energy value drops, the visitor will be trapped in the constant value and will not be able to take advantage of it. Most of the constant rates have an exit payment for those who need to leave the deal early: those can cost up to £75 depending on the fuel.
Ofgem has taken to social media to urge those on a flat fee to proceed with caution. Said:
“THINK BEFORE YOU FIX: Fixed energy rates have returned to the market, but see if they’re right for you. Prices are still unpredictable and signing up for a consistent rate now can mean missing out if costs drop in the future.
The Small Business Federation says EDF joins the ranks of energy providers that will allow small business customers, stuck on very expensive constant tariffs, to adjust their contracts to save money.
The French company is following in the footsteps of British Gas, Engie and Drax by committing to the ‘Blend
The existing reduction in energy costs will also be taken into account in the calculation, thus contributing to the total cost.
Tina McKenzie, the Federation’s head of policy, commented on British Gas’ announcement last month that it would draw up larger price lists over 12 months: “Allowing small businesses to pull out of the energy contracts that set the market peak last year is important for their survival.
“British Gas is doing the right thing by accepting our call and giving small businesses the opportunity to ‘regroup and expand’. We expect this to be within reach of all small business consumers who have been stuck on fixed rates since last year’s peak. point. Now is the time for other providers to follow suit.
British Gas also distributes grants worth £15 million to small businesses facing severe monetary pressures.
In a comment published in The Guardian, a spokesperson for the Federation said it would continue to monitor power companies: “This [Blend initiative]
Commercial energy contracts are almost concluded for a steady period of time and at a steady pace, with serious monetary consequences for corporations that wish to terminate the contract early.
The government is urging families with classic prepaid meters to use their electricity bill vouchers before the June 30 deadline, Cyrus writes.
Last October, the Energy Bill Support Scheme provided £400 in aid over the six months to March, paid in instalments of £66 and £67.
Those who used classic prepaid meters won postal or email vouchers that can be redeemed in the mail or at the UK’s 28,000 retail outlets with PayPoint services, up to 90 days from the date of issue.
More than 83% of the £650 million vouchers have been claimed, but there is still £130 million to be redeemed until the end of June.
Charities and energy suppliers are working with the government to inspire those eligible to use their vouchers.
Adam Scorer, chief executive of the National Energy Action Energy Poverty charity, said: “Some consumers have won them, others have struggled to buy them back. “
Matthew Cole, director of the Fuel Bank Foundation, a charity that provides emergency fuel vouchers to prepaid meter customers, said: “We’ve found that the reasons the vouchers haven’t been used are because other people aren’t receiving them, due to major points or the user who has moved house and their records aren’t up to date, or you’ve lost or deleted the right type.
Lost, missing or expired vouchers can be reissued, as long as they are used before June 30, 2023. Anyone with a classic prepaid meter who has earned their vouchers, knows how to redeem them, or wants to reissue one should tap their provider for assistance.
Ofwat, the water regulator, says 23% of payers are struggling to pay their water bills, compared to 20% of payers in October 2022 and 15% in March 2022.
He adds that only about 30 percent of consumers are aware that they can get monetary help from water companies, while of those who said they were “constantly struggling” with their household bills, only 15 percent said they had won. Assistance from your water supplier.
The percentage of bill payers who say they have “never” struggled to pay a family bill has fallen from 45% in 2021 to 25%.
Ofwat called on water corporations to “continue to step up their efforts and consumers in monetary difficulty. “Information on water corporations can be found on the Ofwat website.
As widely predicted, the energy price cap set by Ofgem, the market regulator, will increase from £3280 to £2074 from 1 July. It will be the electricity charge for families in England, Wales and Scotland until the end of September. The cap will then go into effect from 1 October.
At present, national spending is governed through the Energy Price Guarantee, which was approved by the government last autumn when the Ofgem cap exceeded £3,500. This guarantee amounts to £2,500, but will be replaced by the new limit.
The cutoff point is based on the average household’s typical usage of their provider’s default popular rate. It limits what suppliers can qualify for each unit of energy consumed, as well as constant costs, and doesn’t set the total amount of bills — families pay for the power they use.
From 1 July, the unit point of the value limit, at the nearest cent, for a typical visitor paying by direct debit, will be 30 pence per kilowatt hour (kWh) for electricity consumers and a constant rate of 53 pence per kilowatt hour (kWh).
Analysts expect the October cap to fall below £2,000 before surpassing that figure in early 2024. However, the real target of the cap was decided through wholesale costs in the weeks leading up to its announcement, so there is no certainty about those costs. Predictions.
Lowering the cap in July will lead to a drop in typical household spending compared to today; However, in March 2022, the energy value cap was just £1277 a year, and at the same time, last year it was still below £2000. , to £1,971. An upper limit of £2,000 is expensive in old terms.
As shown below, analyst Cornwall Insight expects household spending to return to pre-pandemic and pre-Ukraine war levels through the end of the decade.
The low point of the cap, which reflects declining wholesale energy prices, could prompt a resurgence of tariff changes, allowing families to seek less expensive deals. If this happens, competitive fixed rates and fixed term (12 months) will be offered. The offers will only be noticeable from the end of June.
Before the energy market came to a standstill in 2021/22, around six million households updated their energy price lists every year.
In July, prepaid meter consumers will also be charged the same unit rates for fuel and electric power as those who pay their arrears by direct debit. Currently, prepayment expenses are higher to reflect administrative and service costs, however, the government has ordered that this premium be waived.
Energy market regulator Ofgem will unveil the latest edition of its price cap on Thursday 25 May, which will cover the period from July to the end of September.
Cornwall Insight, the market analyst, predicts that this amount will fall to £2,053 a year for a family with typical consumption levels, who pay in arrears via direct debit; However, the actual expenses still reflect the amount of energy used.
The current limit for typical use is £3280, but it is expected to come down thanks to falling wholesale energy prices, especially natural gas.
At the moment, the cap has nothing to do with expenditure, as it is higher than the government’s separate guarantee of value, which limits average annual expenditures to £2,500. However, if the limit falls below the guarantee level, suppliers will have to set their values at or below the maximum level, raising the prospect of lower spending than existing from July.
It is also conceivable that suppliers will begin to compete for contracts due to declining wholesale prices. There hasn’t been any replacement rate on the open market for over a year.
Cornwall Insight’s forecast for Ofgem’s October to December cap is that it will fall to £1,975 and then to £2,044 in the first quarter of 2024. The longer-term scenario remains unclear, as wholesale costs may soar again as a result of unforeseen external changes. crisis. la turmoil.
The analyst commented: “Even though the cap was lowered (in July) from the exorbitant prices of the past two years, the figure remains above £1,000 in a year above the price cap levels seen before the pandemic.
“Ultimately, we expect costs to return to pre-2020 levels by the end of the decade at the earliest.
“However, we are hopeful to see a resurgence of more competitive consistent energy rates as costs begin to stabilize, offering consumers more features to manage their energy costs.
“Prices remain subject to wholesale energy market volatility, and our reliance on energy imports means that geopolitical incidents can still have a significant effect on energy prices. “
Good Energy and OVO Energy consumers who were overcharged £2. 7 million for the song will have to be reimbursed and compensated, writes Candiece Cyrus.
This follows an investigation by industry regulator Ofgem which found that between October 2022 and March 2023, nearly 11,000 OVO Energy consumers were overcharged for a total of just £1. 5 million.
They also found that between January 2019 and October 2022, just under 7,000 Good Energy customers were overcharged by almost £400,000.
OVO Energy consumers will receive a rebate and get a rebate totalling £181 each. Overburdened Good Energy consumers will get a rebate and rebate of an average of £109 each.
Customers have been overcharged in relation to Ofgem’s energy value limit or the government’s energy value guarantee, which temporarily replaces the limit to keep prices more affordable. Suppliers must set their values at or below the limit of the limit or guarantee, depending on the point in effect at the time.
Dan Norton, deputy director of retail at Ofgem, said: “Consumer coverage is our most sensible priority, and we expect providers to ensure consumers pay no more than the value limit or guaranteed energy value – schemes put in place with the same aim of helping people.
“It is unacceptable that Good Energy and OVO Energy consumers have been overcharged, especially at an already complicated and stressful time for UK consumers.
Energy suppliers will need to hear this loud and clear: we expect their suppliers to act with the utmost caution and integrity. We will continue to hold them accountable if they fail to comply with their visitor coverage or reporting obligations.
Good Energy and OVO Energy will also contribute £1. 25 million and £10,000 respectively to Ofgem’s reparation fund, which supports consumers in vulnerable situations.
Ofgem claims that OVO Energy’s contribution would have been significantly higher if it had informed the regulator of its overload issue and resolved it in time.
Good Energy has submitted an improvement plan, at the request of the regulator, to ensure that action is taken against overloads in the future.
The company, along with E. ON Next and Octopus Energy, were also fined through Ofgem for failing to submit a final bill or failing to compensate consumers who switched to another supplier. He ordered a total of £18,000 to be paid to 350 former customers (see update below).
Three energy suppliers have paid £8 million in fines for failing to compensate their former customers in time.
Suppliers are required to send a final invoice to consumers who have switched providers within six weeks, as provided for in the Guaranteed Performance Standards (GSOP) regulation introduced in May 2020.
Those who fail to submit invoices within six weeks will be required to pay £30 in a one-off refund to affected customers. If invoices do not arrive within the additional 10 working days, consumers are entitled to an additional £30.
Energy regulator Ofgem has asked E. On Next to pay £5. 5 million to around 95,000 consumers, Octopus Energy to pay £750,000 to 19,000 consumers and Good Energy to pay 350 consumers, for a combined total of £18,000.
Ofgem says that failing to get a final bill in a timely manner can lead to misconfiguration of consumers at the new supplier, debt to the old supplier, and a giant, unforeseen bill.
The watchdog found that the three suppliers had failed or unduly delayed payment of invoices worth £6,305,925 owed to more than 100,000 customers.
This is the first time Ofgem has implemented GSOP rules. Neil Kenward of Ofgem said: “Ofgem has brought those criteria so that consumers get the service they deserve when they transfer energy suppliers.
“Our regulations mean that when electric corporations are delayed, consumers are compensated. We will not hesitate to hold the electric corporations to account, as we have done today.
“As the energy market begins to recover, we will most likely see a return to more replacements, and this action is a reminder to suppliers that they want replacement to be as simple and convenient as possible for their customers, and where they cause undue delays, to pay the rebate promptly.
Suppliers have paid a further £1. 7 million in rebate to consumers or to the Energy Sector Voluntary Recourse Scheme (EIVRS), which is helping vulnerable consumers. This amount included £1. 3 million from E. On Next in popularity of the formula and delays in payments.
Ofgem says all three providers have now updated their billing processes and systems to ensure invoices are made in accordance with regulations.
Citizens Advice warns that most homes will require some point of improvement in energy power, costing an average of £15,000, if the UK is to achieve the prestige of having net-zero carbon emissions by 2050, writes Candiece Cyrus.
He says most families who aren’t eligible for government support, such as the Boiler Upgrade Plan, face monetary barriers to making changes.
Applicants for the program will need to be eligible asset owners with an Energy Performance Certificate (EPC) with no notable recommendations for attic wall insulation or hollow spaces. Grants of up to £6,000 for heat pumps and biomass boilers.
Following a survey of 12,000 people in England and Wales, Citizens Advice found that around 90% of respondents cite the cost of home renovations, from installing floor and wall insulation to installing double or triple glazed windows, as a barrier to securing a home. Paintings made.
Less than 20% of respondents said they could purchase a heat pump, which costs an average of £10,000, without borrowing money, while less than 20% were willing to borrow money through a loan or unsecured loan to finance improvements.
In addition to the monetary implications, most respondents did not need to make energy-efficient innovations in their homes. Only 40% expressed interest, with the majority preferring measures such as attic insulation and double or triple glazing to installing a heat pump. insulation of slab walls and insulation of hollow spaces and floors.
A similar number said they would invest in electric power measures after learning this could save an average family £300 on their annual energy bill, demonstrating the need for incentives.
About 30 per cent of respondents are concerned about the effectiveness and adequacy of the measures taken.
The survey also found that age influences homeowners’ enthusiasm for their homes. Respondents between the ages of 18 and 34 were nearly three times more likely to be interested in installing a heat pump than homeowners over the age of 55.
According to the Energy Saving Trust, fewer than 250,000 of the UK’s 29 million homes have heat pumps, but the government expects millions more to have them in the next 10 to 15 years to meet its net-zero emissions targets.
Analyst Cornwall Insight says utilities could start offering fixed-rate and fixed-term deals as early as July, as wholesale prices stabilize at lower levels than they’ve seen in more than 18 months, writes Candiece Cyrus.
Fixed competitive agreements have been virtually non-existent since the market fell into crisis ahead of Russia’s invasion of Ukraine in February last year and subsequent sanctions on Russian fuel exports.
Wholesale costs rose in 2021 as fears of clashes grew and more than two dozen energy providers closed their doors.
However, the combination of a mild winter and lower visitor demand in 2022/23 led to higher-than-expected European garage levels, helping to ease energy concerns and curb market volatility.
Currently, the Government’s Energy Price Guarantee, which was introduced in October last year to help families facing emerging energy bills, limits the amount businesses can rate their consumers per unit of energy and constant tariffs, to £2,500 per year on average. .
It replaces the price cap, set quarterly by energy regulator Ofgem, which limits the amount energy companies can rate their consumers based on the unit of energy and constant price lists based on wholesale prices.
Lately, energy suppliers set their prices based on the warranty. However, from July, Ofgem’s price cap risks undermining the government’s guarantee, in which case companies will only offer rates equal to or below the cap.
Cornwall Insight predicts that the cap will fall to £2,063 per year for an average household, over the constant period between July and September, from its current point of £3,280. It says the cap is expected to remain robust over the next year, at £2098 per year between October and December and then £2162 per year between January and March 2024.
While consistent agreements can help consumers better manage their bills, as their unit value lists will remain the same for the duration of the agreement (usually 12/24 months), they should be aware that there is a risk of wasting by paying less if the wholesale value is reduced. Energy prices fall this period.
Dr Craig Lowrey of Cornwall Insight says: “While the wholesale energy market has stabilised in recent weeks, our value limit forecasts have followed suit. Some energy suppliers will potentially try to take advantage of this opportunity to regain the lists of constant values around the value limit, with solid projections reducing fears of long-term losses.
“This potential resurgence of competitive tariff proposals gives families the opportunity to control their energy expenditures in spite of everything, after having been hit hard by the energy crisis. Even if this sounds positive, setting energy values is a gamble, the market can go up or down, and families risk being forced to pay expenses above the value limit.
Regulator Ofgem tweeted the message THINK BEFORE YOU FIX today, adding: “Fixed energy price lists may reappear on the market, but check to see if they suit your needs. Prices are still unpredictable and signing up now at a consistent rate may simply mean losing out if costs go down. “
Energy regulator Ofgem is proposing the creation of a common universal register of priority facilities that would allow vulnerable families who receive certain means-tested benefits to register once to learn more about application services, writes Candiece Cyrus.
Currently, consumers will have to register with each company. The proposed common registry through Ofgem would unify the existing databases of electric corporations and other utilities, adding water suppliers.
Clients are vulnerable for reasons such as age, illness, disability, or the presence of dependent youth in their household.
Customers officially known through a company as vulnerable get additional support perks such as:
Jonathan Brearley, Chief Executive of Ofgem, commented: “Our regulations obviously require network providers and corporations to use their Priority Services Register to supply suitable products to customers. This is an incredibly vital component of the terms of the license and we will respond vigorously if it does not. “.
“We deserve everyone to create a non-unusual registry, not just between water and energy, but adding broader sectors and potentially local and national governments, such as the knowledge that is held through the Department for Work and Pensions.
“Ideally, this common registry would be based on the ‘tell us once’ principle: families who have vulnerabilities notify a company, and with their permission, this data is shared among others with a single, trusted source of knowledge to anticipate, identify, and respond. to the wishes of such customers.
The energy regulator says corporations aren’t doing enough to inform their consumers about the benefits they can reap if they are vulnerable. According to their research, only one in three customers are aware of the lifestyles of a priority services login and of the fact that those who do, it does not include a significant minority who might be eligible for assistance depending on their scenario.
Elizabeth Blakelock, head of policy at Citizens Advice, tweeted: “No single regulator can do this imaginable – they only have the ability to run corporations in their sector. That’s why we want the government to set up a working group to agree the scope of this formula. ” and ensure the participation of companies.
Ofgem, the energy market regulator, has today published a code of conduct for energy suppliers, which describes how they perform inadvertent (or forced) prepaid meter installations (PPMS), writes Bethany Garner.
The aim is to limit the amount of services in vulnerable households, with a total ban on other at-risk people (see below).
The unintentional installation of PPM is used as a last resort for consumers who have significant arrears on a popular electricity meter. But in recent months, suppliers such as British Gas, Scottish Power and Ovo have come under fire for their forced installations in homes occupied by “vulnerable” areas. consumers, adding the elderly, which is not allowed.
They came to light when the Times reported on cases of vendors’ representatives breaking into homes to replace the meter.
Forced installations have been temporarily banned since the case broke in March. They will resume in May, under approved circumstances, with suppliers having to meet a number of criteria before proceeding.
The code, developed in consultation with Citizens Advice, Energy UK and other stakeholders, will come into force today. All energy suppliers in England, Scotland and Wales have registered.
It prohibits providers from requiring the installation of PPM from consumers that Ofgem deems to be “high risk. “
This category includes adults over the age of 85, other people with serious or terminal illnesses, and those who require a constant source of electrical power for medical reasons. These other people would possibly rely on electrical appliances such as ventilators or dialysis machines.
The Code also clarifies the cases in which forced installations of PPM can still be performed.
Suppliers install a PPM unless the visitor has not paid their invoice for at least 3 months or is in significant debt of at least £200 for fuel.
If the visitor already has a debt repayment plan, the provider installs a PPM without the visitor’s consent.
While consumers in the “high vulnerability” organization are completely opposed to unintentional installation, those classified as “medium risk” will be tested on a case-by-case basis before proceeding with a forced installation.
This organization includes families with children under the age of five, seniors (over the age of 75), and people with severe physical or intellectual fitness issues.
Our power spokesman, Kevin Pratt, said: “It’s good news that the wellbeing of those deemed high-risk is protected by the new rules, but there are charities involved that others – those under 85 and some seriously ill or young young – may be literally excluded, because forced installations will be authorised.
Caroline Abrahams, charity director at Age UK, said: “It’s smart that some regulation is coming into force to start limiting the practice of forcibly installing prepaid meters, which used to be a Wild West thing, but those new regulations don’t ‘t. no happen enough.
“We affirm that no older user deserves to be subjected to this treatment, not only those over 85 years of age and those over 75 years of age who are considered vulnerable in one way or another, partly as a matter of precept but also because of considerations about efficacy. of the treatment. Vulnerability assessment will be conducted.
“The risk is that some older people, and also younger people, who are probably not on a prepaid meter, will end up using that meter. “
The Code of Practice states that:
Pratt added: “The root of the problem is simply that energy is too expensive. As a result, families find themselves with unmanageable arrears on their popular meter expenses and end up being forced to sign an early payment agreement. But we will only achieve this through radical measures, such as the arrival of a social tariff that subsidizes costs for those considered most vulnerable.
“For this to happen, we want buy-in from the regulator, suppliers and, above all, the government and other bill payers who will have to settle for a social tariff actually being funded by everyone’s energy bills. But unless there is “a deep structural reform of the long-suffering energy sector, supported at the social level, it is hard to believe how arguable disorders such as the clumsy and ruthless forced installation of meters can be solved. “
If a vendor installs a PPM in a way that violates the Code, they will need to dispose of the device and the visitor will possibly be entitled to compensation.
Customers who believe that their supplier has violated this code may refer the matter to the Electricity Ombudsman.
Analyst Cornwall Insight predicts that Ofgem’s energy value limit, which limits what suppliers rate families per unit of energy and by constant costs, will fall to £2,024 per year in July and £2,076 per year in October for an average energy family. use, writes Candiece Cyrus.
This is higher than estimates announced last week, up to £2,000 compared to a year earlier in July and £2,023 compared to a year earlier in October, indicating continued volatility in the wholesale energy market.
The limit for the April-June period is £3280, up from £4270 in the first quarter of the year.
The cap was recently implemented on household expenses, as the government’s energy value guarantee, introduced in October last year, caps spending at £2,500 a year for an average family. It will remain at this point until March 31, 2024.
Once the limit falls below the EPG point, the EPG will disappear and the limit will be applied again to household expenses. Even if this constituted significant relief in expenditures, this amount would still be significantly higher than the pre-2021 ceiling. point.
Lowrey said: “The energy market has had a challenging adventure over the past three years, facing energy costs at levels never seen before.
“Our forecast for the first part of 2023 shows the prospect of a stronger energy climate that, all other things being equal, will cause energy expenditures to continue their downward trajectory. However, in the short term, they remain above the old highs.
“Of course, we never take anything for granted, and as soon as they subside, global shocks and our dependence on energy imports can cause the energy market, and consequently bills, to rise again. “
Cornwall Insight also says that businesses that had to pay their energy costs when wholesale costs peaked in August last year will see their electricity costs increase by up to 133% from tomorrow.
Most pro-energy price lists have a constant deadline, and companies can only transfer a “renewal window” to suppliers towards the end of the period. This means that they are at the mercy of the market prices prevailing at the time.
Cornwall Insight says the price increase is due to government relief for businesses, with the Energy Bill Relief Program replaced by the less generous Energy Bill Discount Program (EBDS) on April 1.
The analyst’s announcement follows a warning from the Federation of Small Business that emerging energy costs may force 370,000 corporations to downsize, restructure or, in the worst-case scenario, close their doors (see article below).
Under the new plan, which will be in place until March 31, 2024, companies will benefit from a much smaller reduction in the unit value of their fuel and electricity once wholesale prices reach a certain threshold. Companies that are large consumers of energy, also known as commercially extensive industries or ETIIs, will have to apply for a giant rebate.
Dr Craig Lowrey of Cornwall Insight said: “The effect of EBDS on businesses is not uniform and will vary widely across sectors. Energy-intensive industries that will get more help under EBDS may also enjoy greater monetary stability, while vulnerable businesses, some of which are already suffering post-pandemic, might consider it a hard pill to swallow with reduced levels of aid and costly, consistent contracts.
The Small Business Federation warns that adjustments made this weekend to government subsidies for business energy prices may force 370,000 businesses to make basic adjustments to their operations, adding to the shutdown in some cases.
On Saturday, April 1, the Energy Bill Relief Program (EBRS) will be replaced by the Energy Bill Discount Program (EBDS).
The new program, which will run until March 31 next year, offers non-household energy users a reduction in the value of the unit of energy they use. This happens when the value of the unit reaches a certain threshold and is limited to a constant amount.
For maximum non-national energy users in Great Britain and Northern Ireland, these maximum thresholds and rebates have been set at:
Companies that rely heavily on electricity and fuel consumption, known as energy-intensive industries and trading or ETIIs, will be required to apply for a higher rebate up to a maximum limit, which will apply to 70% of their energy volumes.
For electricity, the maximum will be £89 per MWh with a price threshold of £185 per MWh. For gas, £40 per MWh with a price threshold of £99 per MWh.
Suppliers will apply the relief to businesses’ electricity bills.
The FSB and other industry groups say the offer is particularly inferior to that offered through EBRS, which was introduced in October last year to offer a discount from a wholesale unit value threshold of £211 per MWh for electricity and £75. consistent with MWh for electric power. gas.
According to the FSB, 340,000 small businesses that paid their energy costs last year, when wholesale trade was at its peak, will see their expenses increase, in some cases, by as much as several thousand euros.
It says a pub that consumes 48,000 kWh of electricity and 192,000 kWh of fuel each year, which followed a new electricity tariff in August last year, would have seen its estimated annual energy bill reduced by £85,000 to £60,000 according to the EBRS, which is ending on March 31.
From 1 April, under the EBDS, you would only get just over £2,000 in aid, leaving you with £83,000 to pay for energy costs.
Therefore, the FSB advocates for an “Aid to Ecology” program as a long-term solution for corporations facing high energy costs. It would offer small businesses a £5,000 voucher to invest in energy-saving measures or even energy production. Premium insulation, solar panels and heat pumps.
He also called on suppliers to show sympathy for the companies and offer a “broad and mixed” strategy to price their offers, allowing companies with higher price lists to take advantage of lower wholesale energy prices since January this year.
However, as suppliers buy months in advance, existing costs still reflect the higher wholesale costs paid last year.
Tina McKenzie, political chair of the FSB, said: “The increase in energy costs on April Fool’s Day will not be a laughing matter, but it will come as a surprise to thousands of small businesses, who signed fixed-term contracts when the government was handed over guaranteed through EBRS.
“Some 370,000 small businesses could also be forced to consider downsizing, restructuring or outright, because they are highly unlikely to pass on full prices to customers, who suddenly can’t afford to pay £25 for a pizza or see the value of a double pint.
“There’s a lot to do and do besides leaving small businesses alone. Allowing the most vulnerable small businesses to renegotiate or “combine and extend” their energy contracts to better reflect declining wholesale energy costs is the least the government and energy providers can do.
Figures released through the Department of Energy Security
A total of 94,201 prepaid meters were forcibly installed last year, and the three companies mentioned above were guilty of 66,187 meters.
Historically, energy corporations have petitioned the courts for an injunction to obtain permission to enter an asset to replace the occupant’s meter, regularly as the last hotel due to significant arrears.
However, this practice came to light following revelations by the Times that British Gas forcibly installed meters in homes occupied by “vulnerable” customers, including the elderly, which is not allowed.
As a result, Congressman Grant Shapps, Secretary of Energy Security, suspended the mandatory prepaid meter meeting until March 31. Ofgem has since extended the suspension until it is glad that companies are complying with a revised code of conduct.
The Chancellor also announced in his March 15 budget that families with prepaid meters will no longer have to pay more than others for their electricity from July. Currently, the prepaid rate is higher to reflect the burden of administering the system.
In its investigation of the 2022 figures, the Department of Energy rates Scottish Power as the “worst offender” when comparing the number of forcibly installed meters (more than 24,300) relative to its visitor base. The government says this equates to 500 installations consistent with 100,000 measurement points.
British Gas forcibly installed 25,000, while for Ovo Energy the figure exceeded 16,000.
This compares to around 10,000 for E. ON, 7,000 for EDF and 4,000 for Shell. Utilita and Bulb forcibly installed more than 2,000 of them, adding 1,500 through Utility Warehouse, just over a hundred through Tru Energy, and less than a hundred through Ecotricity. , Good Energy and Octopus.
Shapps said today last month: “Today’s figures paint a transparent and frightening picture of the scale of forced installation of prepaid meters, with an average of more than 7,500 forced installations per month recorded last year.
“After my calls for change, I am glad that suppliers have made their moves public and agreed to permanently end the prepayment imposed on vulnerable consumers, but this is happening again.
“I will be closely monitoring Ofgem’s ongoing review to ensure that consumers get what they want and that vulnerable consumers who have suffered unjustly forced installations get the justice they deserve in the form of redress. “
Shapps also suggested that family assistance providers using classic prepaid meters access the 2. 1 million vouchers that have yet to be claimed under the government’s energy bill scheme.
An increasing number of people with classic prepaid meters are using their vouchers: as of February, 7. 6 million vouchers had been redeemed in two million households. The percentage of vouchers redeemed has been increasing, reaching 76% in January and 78% in February.
The £400 vouchers for family energy expenses in instalments for six consecutive months from October to March.
Providers send consumers of classic prepaid meters their vouchers by post, SMS, email or as automatic credits when refilling. They can be redeemed at the post office or at all 28,000 UK outlets with PayPoint for up to 90 days from the date of issue.
Ahead of this afternoon’s budget, the government has shown that its Energy Price Guarantee (EPG) will remain at £2,500 until the end of June. It is expected to rise to £3,000 on April 1.
The cost of subsidies for national energy expenditures has fallen, giving Chancellor Jeremy Hunt the option to extend the measure, which he says will benefit a typical family with a £160 increase.
The EPG figures cited above constitute the annual bill of a family whose average intake will be paid in arrears by direct debit. Those with prepaid meters pay a little more with the EPG, but Mr Hunt also has the budget to close this loophole so that the so-called prepaid premium is eliminated.
This will save average prepaid admission consumers around £45 a year when it arrives later this year.
The government says that, if the EPG had been submitted in October to update the value limit put in place by Ofgem, the market regulator, average expenditures would have reached £4,279 a year this winter.
The value cap, which is reviewed quarterly, will fall to £3280 on April 1, still an amount above the EPG. However, the cap is expected to drop to £2013 in July, when suppliers will be required to provide lists of values that meet the cap, which the EPG has.
The sharp drop in wholesale fuel costs in recent weeks has still been reflected in household expenses, as suppliers buy in advance; Existing expenses still reflect wholesale costs paid in the autumn.
But if wholesale prices continue to fall, it is thought we could see a resurgence of the festival among suppliers, with very high price lists used to inspire consumers to transfer businesses, a market phenomenon that has not worked for 18 months.
The EPG will remain in place until the end of March 2024 and will return to £3000 on July 1. It will come back into play if the Ofgem limit exceeds that figure due to emerging wholesale prices.
As well as predicting that the cap will be £2,013 from July to September, industry analyst Cornwall Insight predicts that it will be £2,002 in the fourth quarter.
Hunt is expected to announce in his speech more cost-of-living aid, adding higher childcare prices for parents with Universal Credit.
No announcement was made prior to the budget related to advertising energy consumers, whose higher expenses inevitably translate into higher prices.
Danni Hewson, head of financial analysis at AJ Bell, said: “From local swimming pools to the industrial-sized greenhouses in which our prized salad is grown, energy prices have become enemy number one. This budget may have been presented simply as a budget to spur expansion, but without more for businesses and households, expansion can be difficult to incubate.
Energy regulator Ofgem has extended a ban on the forced installation of prepaid meters beyond the end of March.
The ban, which also applies to the remote switching of prepaid smart meters, was introduced last month through Ofgem, at the request of Energy Secretary Grant Shapps. This followed reports from the Times that British Gas had forcibly installed prepaid meters at the facility. of vulnerable customers.
It later emerged that other providers were also not treating their consumers by switching them to prepaid meters to restrict arrears on their accounts (see stories below).
A code of practice is being developed to ensure that customers’ interests are related to the use of prepaid meters.
Jonathan Brearley, director general of Ofgem, told members of Parliament’s cross-party committee on business, power and commercial strategy that their priority is to get the industry to act in order: “Companies will only restart services when and if they can identify that they are acting in accordance with the new code of practice.
Citizens Advice, the body responsible for energy consumers, is calling for the arrival of a reduced “social” tariff for suffering families who meet the official definition of energy poverty, writes Candiece Cyrus.
Households that spend more than 10% of their income (housing costs) on energy expenditures are considered to be in energy poverty, and lately around 10 million families are in this situation.
The agreement says that number will reach 12 million homes if the government’s power to guarantee is reduced on April 1, as planned.
Currently, the Guarantee subsidises bills, so a typical family will pay £2,500 a year for fuel and electricity. That figure would rise to £3,000 (a 20% increase) from April if the planned adjustments come into effect, says Citizens Advice. It is expected to remain at £2,500 after an extensive lobbying campaign through charities and customer groups.
An announcement on the long-term Guarantee is expected in next week’s budget.
If the warranty didn’t work, typical energy expenses would be more than £4200 today and around £3300 from April. Citizens Advice reports that families are paying twice as much for energy as they did in 2021, with the lowest source of income being household spending. More than 50% of their source of income after house prices goes to energy expenses, up from 34% in 2019.
The concept of a subsidised social tariff was introduced last year by Keith Anderson of Scottish Power. Ofgem, the market regulator, is investigating how such a tariff could work and, crucially, how eligibility would be decided (see articles below).
Citizens Advice states that a social tariff can simply reduce expenses depending on a household’s source of income and energy use, with an average saving of £381. Cuts can be up to £1,500 for households with the lowest source of income.
Dame Clare Moriarty, chief executive of Citizens Advice, said: “Energy affordability is a long-term challenge that requires a long-term solution. A social tariff protects millions of other people from overspending on their bills.
“High energy costs have forced many other people to alternate between heating and eating. Uncertainty about future peak costs only adds to the tension and worry felt by families across the country.
“This policy will help make energy costs more affordable in the coming years and support the transition to warmer, safer homes that are in a position to move to net zero. “
The announcement of the proposed social tariff follows Age UK’s call for an “early payment amnesty”, which would allow the UK’s 4 million families with prepaid meters to ditch their fee-free meters and replace them with a credit meter.
According to Age UK, 25% of the 4 million households with a prepaid meter have an occupant over the age of 60, and 85% of this organisation are in energy poverty and/or on benefits, have the lowest incomes. The agreement, he says, has been contacted through other people who “disconnect” because they have no means to recharge their meter.
Ofgem, the electricity regulator, has announced that its price cap for the three months from April to June will be £3,280 per year for a dual-energy household paying by direct debit on their average consumption. It currently stands at £4,279 per year. year.
The new cap won’t be used for household spending because it will remain above the government’s energy value guarantee, imposed last October when the cap spiked in reaction to emerging wholesale stocks.
At present, the government guarantee amounts to £2,500 per year (for typical families). It will reach £3,000 on April 1, the same day that Ofgem’s new cap comes into effect. This policy increase will lead to a 20% accrual in family bills.
Charities are calling on the government to keep insurance at £2,500 to worsen the cost-of-living crisis for consumers who are already struggling to pay their bills.
The effect of energy expenditures on household budgets will also worsen from April, as the last bills of the government’s £400 energy bill relief scheme will have been paid, spread across six monthly bills from October 2022 to March 2023.
The burden on taxpayers to subsidize household energy expenses is really the difference between insurance and the Ofgem cap. As the gap narrows as wholesale rates fall, campaigners say the impact on public finances is diminishing to the point where it is moderate to keep the guarantee at £2,500.
They also point to forecasts that Ofgem’s cap will fall further in July at its next review. Analyst Cornwall Insight, who is used to predicting, as he should, the cap moves (he estimated £3,294 for April’s figure, or just £14), says July’s cap will be £2,112.
Moreover, it predicts that the cap will remain largely unchanged in October, at £2,118. It bases its forecasts on research into existing and “long-term” wholesale prices, with the latter being responsible for securing long-term supply.
Once the limit falls below the guarantee level, the guarantee will prevent execution and suppliers will be forced to qualify at or below the limit level.
This means that the government would only have to reach the £2,500 limit for a further three months, after which the need to subsidise expenditure would cease.
An announcement on long-term government for real estate and advertising power is expected in the March 15 budget.
Some suggest that the downward trend in wholesale prices could lead to a reduction in price changes as suppliers reintroduce competitive fixed-value arrangements.
Regulator Ofgem is asking providers to reimburse and remove prepaid meters (PPMs) when they have been improperly installed in customers’ homes, writes Candiece Cyrus.
Earlier this month, The Times revealed that British Gas had used excessive and inappropriate means by forcibly assembling the prepaid meters, adding to the deployment of locksmiths to gain access to vulnerable customers’ properties.
In response, Ofgem launched an investigation into the British Gas case and into prepaid meter installations in general.
Following the intervention of Congressman Grant Shapps, Secretary of Energy, the suppliers agreed to suspend the installation of prepaid meters until March 31.
Commenting on Ofgem’s investigation, Shapps said on Twitter: “Forcing other vulnerable people to use prepaid meters is an outrage. I have made it clear that I need to obtain redress for those who have been wronged.
“It’s true that Ofgem is investigating lately. Strong action will have to be taken when this has happened: they can’t shoot. “
Ofgem says corporations deserve to use the time until the end of March “to review all of their recent forced and remotely switched PPM installations, and whether any deserve to be cancelled, and offer refunds where strict regulations have not been followed. “
Remote switching involves electronically modifying a smart meter to work with an advance payment system and not a credit system.
Industry regulations allow energy providers to forcibly install prepaid meters once they have received a court order. However, Ofgem says this deserves to be a last resort and should not be carried out if the consumer is deemed vulnerable, which includes having underage children. five years old, be pregnant, be of retirement age, or have a disability or intellectual fitness condition.
Jonathan Brearley, chief executive of Ofgem, says suppliers could be fined if systemic issues are detected in their PPM practices.
As part of its review, which will be completed in April, Ofgem will look at what additional protections energy consumers might need in relation to the installation of prepaid meters, and where the need for consumers to switch to prepaid plans can be reduced.
As part of its investigation into British Gas, the company said it would assess that the supplier:
Cornwall Insight has further revised its estimate of the April iteration of Ofgem’s energy value limit, which will be presented today by the regulator in a week’s time.
As this amount will be higher than the government’s energy value guarantee level of £3,000 a year for typical household expenses, the cap will not regulate what other people pay.
The guaranteed value is currently £2500 and will increase to £3000 on April 1st, a 20% increase. March will also see the end of the government’s £400 phase-down plan on energy bills, adding extra pressure to household budgets. .
Cornwall Insight reports that the quarterly-updated limit will fall below the value guarantee point in July, saying the limit will then be £2,153. 34. The forecast for the October cap is £2,161. 05.
Once the cap is below the guaranteed cap, the government will no longer subsidize energy expenditures and suppliers will be required to offer price lists at or below the cap level.
This raises the possibility that consumers will opt for competitive offers if providers create attractive fixed-term offers to capture market share.
However, it must be remembered that, even at around £2,150, the limit in July would still be almost £1,200 higher than in July 2022, when it stood at £1,971, again for families with a consumption half.
The reduction in the cap reflects the lower prices that utilities pay in the wholesale market to secure their long-term supplies. Prices are falling as countries look for opportunities for Russian natural gas.
The cap will remain maximum for the time being to reflect the higher costs corporations already pay for the fuel they get now and over the summer.
According to industry analyst Cornwall Insight, lower wholesale prices could simply lead to the return of the energy market festival from July, allowing consumers to opt for less expensive deals.
In the years leading up to 2021, before the current energy crisis, around six million families changed suppliers every year, moving to constant price lists lasting 12 or 24 months.
Its value is lower than that of the popular variable rate fees (SVT), the value of which is capped as of 2019 by a maximum value set by the market regulator, Ofgem.
However, as wholesale costs increased in the second part of 2021 and into 2022, the availability of cheap answers dried up and SVTs were the lowest-cost option. Since all providers price their SVTs at or near the Ofgem limit, the incentive to transfer is gone. .
Since then, as the cap has increased in reaction to skyrocketing wholesale costs, the government has implemented the Energy Price Guarantee (EPG), which is below the Ofgem limit, and which means that costs per unit of energy used are kept at a fixed point for all domestic customers.
According to the EPG, the average annual bill for a typical family is £2,500. If the cap remains in place, that figure would be £4,279.
However, the average EPG bill will rise to £3,000 a year from April as the government reduces support. This value will still be below the planned value limit at the moment, however, in July the limit is expected to fall to around £2,360, and energy expenses will have to reflect the point of the cap, not the EPG.
Cornwall Insight commented: “Suppliers will most likely offer fixed rates that compete with the government’s capped prices, reviving the benefits of switching providers.
“As we look at the prospects for change, we note that if wholesale market volatility, such as that experienced in 2022, returns, it would possibly be unprofitable or impractical for suppliers to offer the kind of competitive rates in question.
“However, existing market conditions suggest that households are possibly more concerned about the energy market than they have been in recent times. “
Price differences between suppliers can persist because companies buy energy materials in bulk in advance, at other times, and at different prices. Some might also choose to downgrade their competition to secure their market share.
All energy providers have agreed to prevent the forced installation of prepaid meters in customers’ homes. This resolution responds to government requests to replace their practices (see story below), writes Candiece Cyrus.
Congressman Grant Shapps, the energy secretary, wrote to providers last Sunday, asking them to tell him what their consumers look like and how many mandates each has to forcibly install prepaid meters.
Last Tuesday, he set a deadline for suppliers to tell him how they would see the scenario of consumers who deserve not to have prepaid meters installed, adding the payment of compensation.
Today’s announcement on the cessation of forced settlements follows Judge Edis’ order to magistrates’ courts to block the approval of arrest warrants this week.
However, Shapps believes the industry’s regulator, Ofgem, wants to do more to oversee how electricity corporations treat their consumers. Ofgem said it would ask consumers about their experiences, and not just providers.
While all of the vendors responded to Mr. Shapps, with several of them outlining solutions for their customers, such as refunding or replacing a prepaid meter with a credit meter, he said several of them had provided the main points about their plans.
Ofgem is asking its suppliers to vulnerable consumers who are struggling with their bills, for example by offering them affordable payment plans and only offering them prepaid meters as a last resort.
Vulnerable customers come with seniors, other people with disabilities, and parents of young children.
A recent article in The Times revealed that British Gas had hired locksmiths to install prepaid meters in homes because the occupants were using their credit meters.
Providers have also switched meters remotely to prepaid mode.
Since last summer, Charity Citizens Advice has also been calling for a ban on forced installations, after the number of other people who simply can’t top up their prepaid meters exceeded the grades of the last 10 years combined.
Shapps says he will “continue to stand up for vulnerable consumers whose homes have been invaded and ensure this happens in the future. “
He added: “It is understandable that people have been shocked and dismayed to see how the homes of other vulnerable people have been invaded and prepaid meters installed against their will, and providers are just the beginning of correcting this abhorrent behaviour.
“I am angry that some have so freely moved vulnerable consumers to prepaid meters, without a proper plan to take corrective action in case of violations of the rules. So I only gained part of the picture, because it still doesn’t involve enough human movements offering redress to those who have been treated so appallingly.
Prime Minister Rishi Sunak has split the Department for Business, Energy and Industrial Strategy (BEIS) into 3 new departments, writes Candiece Cyrus.
It established the Department of Energy Security and Net Zero, along with the Department of Science, Innovation and Technology and the Department of Business and Commerce.
It “reorients” the Ministry of Culture, Media and Sports.
Grant Shapps, MP, moved from Secretary for Business, Energy and Industrial Strategy to Secretary of State for Energy Security and Net Zero.
Following his appointment, Shapps tweeted: “My goal will be to protect our energy source in the long term, reduce expenses and thus help cut inflation in half. “
On Sunday, Shapps gave utilities until the end of the day (Tuesday) to tell him what action they would take if they were found to have improperly installed prepaid meters on vulnerable customers.
The Secretary of Science, Innovation and Technology is Deputy Michelle Donelan. She is the Secretary of Culture.
The Secretary for International Trade, MP Kemi Badenoch, has been appointed Secretary for Business and Trade. She remains Chair of the Board of Trade and Minister for Women and Equality.
Lucy Frazer KC MP is the new Secretary of State for Culture, Media and Sport, and in the past served as Minister of State for Housing and Planning.
Analysts at Cornwall Insight have released revised forecasts on the energy value cap for the rest of the year that, if accurate, will see the cap diminish the government’s energy value guarantee, writes Candiece Cyrus.
The price cap introduced in 2019 by industry regulator Ofgem, to limit the amount that energy suppliers can rate families per unit of energy and for the associated ongoing costs.
Updated quarterly, in reaction to wholesale energy costs, it now stands at £4279 for the period January to March 2023.
However, thanks to the government guarantee, which subsidises song costs of £2,500 on average per year until the end of March, the cap is not currently being used for domestic consumers – the Cornwall Insight figure shows what a family with average intake would pay if they were.
The insurance targets £3,000 in April and will last for 12 months.
Cornwall Insight predicts that the cap will drop to £3,338 in April, before dropping further to about £2,362 in July. This would place the limit under the guarantee, making the latter redundant at this level; Family expenses would then be covered with our minds through the limit. However, they would still be well above the £1,271 average in place 12 months ago.
In October, analysts expect the cap to be £2,389, which is still under warranty.
Forecasts for the limit are declining because European countries were once dependent on Russia for their plant-based energy supplies.
Warmer temperatures have also helped energy demand, pushing down wholesale prices.
Congressman Grant Shapps, the energy secretary, gave energy providers until Tuesday to tell him what action they would take if they were found to have incorrectly installed prepaid meters in the homes of vulnerable customers.
Mr. Shapps is in favour of paying reimbursement in such cases.
As stated below, British Gas has pleaded guilty in cases where vulnerable households, including those with young children or physical conditions, have not been treated or have not been treated with compassion.
News of the scandal, first reported through the Times, includes reports of debt creditors breaking into homes to install prepaid meters. It also turns out that some providers are remotely switching smart meters to prepaid mode.
Shapps is not pleased with the fact that a series of reviews carried out by regulator Ofgem on suppliers of energy supplied through them have failed to identify this unacceptable behaviour or other significant shortcomings, and have even given some corporations an intelligent suitability check.
He ordered Ofgem to get stricter with energy suppliers and survey visitors’ experience with their performance, adding that it introduced a new visitor reporting formula that allows families to share their own stories about how they are being treated.
Mr Shapps said: “I am appalled that vulnerable consumers suffering with their energy costs have had their homes flooded and prepaid meters installed when there is a transparent legal responsibility for providers to provide assistance.
“They want to refocus their efforts on their consumers, who are the ones who suffer from this abhorrent behavior.
“I’m also concerned that the regulator is too easily fooled by taking at face value what the utilities tell them. Attention will need to be paid to consumers to ensure that this remedy for vulnerable consumers is not reapplied.
Last Thursday, several suppliers announced that they would suspend forced installations after Ofgem insisted that they suspend the practice. But this time last week, Shapps introduced a crackdown on the mistreatment of power users by vendors, asking them to voluntarily put an end to the practice.
Regulator Ofgem has acted to quell the growing controversy over the forced installation of prepaid meters through electricity companies, in families known as “vulnerable”.
The move, which would come with asking energy suppliers to suspend all forced installations, follows an investigation by The Times that found British Gas had used locksmiths to enter homes so that meters could simply be changed.
Ofgem said: “These are incredibly serious allegations across The Times. We are launching an urgent investigation into British Gas and will be hesitant to take enforcement action by the company.
“It is unacceptable for a provider to impose forced installations on vulnerable consumers who have to pay their expenses before all other functions have been exhausted and without conducting thorough checks to ensure this is feasible.
“We have introduced a market-wide primary investigation to investigate the immediate expansion of prepaid meter installations and potential violations of licenses requiring it.
“We are transparent that providers will have to work hard to take care of their consumers this time, especially those who are vulnerable. The electricity crisis is not an excuse for unacceptable behavior towards a customer, especially those in vulnerable situations.
There are around 4. 5 million families with prepaid meters in the UK. Many homeowners favor them and they are also used when consumers are unable or unwilling to pay for their energy usage in installments through a monthly or quarterly bill.
However, prepaid meters are more expensive than credit meters due to higher administrative costs.
When a visitor with a credit meter has significant arrears, energy providers can petition the courts for a court order to install a prepayment meter to prevent the arrears from getting worse.
But the alleged use of forced access to homes occupied by vulnerable families through agents working on behalf of British Gas has led to complaints that the total formula is open to abuse.
Energy Minister Graham Stuart MP asked British Gas for assurances that its “totally unacceptable” behaviour would be repeated.
He said on social media: “I want to see responsibility at the highest point of the company and an explanation of the personal role he [British Gas Centrica CEO Chris O’Shea] will take in dealing with these very serious cultural issues. problems and reclaim the place. Public Trust.
“Most importantly, I need those affected by this situation to be known and provided with reparations. Even if the wrongdoing cannot be repaired, a truly large refund can be granted.
“British Gas has trusted me that this procedure has commenced and I will follow the case very closely so that justice prevails. “
O’Shea told the BBC that British Gas had suspended the obligation to install prepaid meters.
Ofgem has already announced a review of the installation of forced prepaid meters and the remote transfer of credit meters to prepaid operation.
The regulator also published an investigation into visitor service and the functionality of court cases based on data submitted through 17 energy providers. Found:
In addition, Ofgem discovered for companies the following:
Ofgem is unable to identify suppliers that do not have weaknesses. It has initiated a commitment to compliance in spaces that require improvement.
Households with smart meters will have the opportunity to get credits on their energy expenses tonight through the call for the Reaction Flexibility Service managed through National Grid and energy providers, writes Kevin Pratt.
The service, designed to reduce electricity consumption at peak times and ensure security of supply, will last from 4:30 p. m. to 8:30 p. m. Last night (Monday), the program was operational for the first time after a series of tests last year: it ran from five in the afternoon until six in the evening. at 6 p. m. , with about one million households participating.
Monetary praise, which is regularly paid in the form of a reduction in the next bill, is determined through the amount of energy not used compared to the time in question. A family that reduces their consumption by one kilowatt hour can save between £3 and £6, according to National Grid, although it’s up to each supplier to calculate the actual amounts.
To participate you need a Wise meter and your energy provider will need to be enrolled in the program – you’ll get it the day before the Service is up and running, if applicable.
If your provider is not participating, you may need to hire an independent company to pull the applicable main points from your meter through an app. Participant details can be found here. Domestic and professional consumers are eligible.
The main aim of the programme is not to meet demand in England, Scotland and Wales, where it operates. Rather, the goal is to optimize the installation at peak times and the voltage on the grid, thus avoiding forced outages. .
National Grid says it’s managing the task as a precaution and that other people aren’t worried about power outages. Industry observers say the challenge stems from a number of reasons, adding a lack of storage capacity for plant fuel, which is used to generate electricity, and a calm climate, which has reduced output from wind farms.
The Grid is also restarting idle coal-fired power plants as an additional backup, especially if the bloody crisis continues. At the moment, the option to activate the DSR service is planned until the end of March.
Congressman Grant Shapps, Secretary of Business and Energy, has written to energy providers asking them to stop forcibly moving consumers to prepaid meters without offering good enough to those who are struggling.
Mr Shapps is calling for a voluntary commitment to end this practice. It also asks that the number of arrest warrants they have applied for in recent months be percentaged, which will allow them to replace a home’s meter.
The government says providers are redoubling their efforts to help consumers with monetary difficulties before forcing the switch to an early payment arrangement. Statistics show that many families who are forced to relocate have their power cut off because they don’t have the cash to qualify their new meter. .
National Grid’s flexibility service call will be used for the first time tonight between five p. m. and 6 p. m. due to an expected build-up of cold-weather-like weather demand. He said: “This doesn’t mean that the source of electrical power is in danger and that people aren’t worried. These are precautionary measures to maintain the spare capacity we need.
The service allows consumers of contracted energy providers to receive a financial reward if they reduce their electricity consumption at peak times. Customers, who must have a smart meter, are contacted in advance through their provider in order to participate. The amount earned through participants can only be as high as £10 depending on how much their overall hourly electricity consumption is.
National Grid has also called on manufacturers to fire up coal-fired power plants to improve security of supply.
Shapps believes it’s possible that companies are simply offering more credit, debt forgiveness or debt counseling. He asked suppliers to talk about conceivable steps they can take to help consumers and avoid forced settlements.
He says the courts are “overwhelmed” with requests for court orders, with reports of grand prix being approved in minutes. The government wants the procedure by which providers take these instances to court to be fair, transparent and supportive of vulnerable customers.
Shapps said: “Providers are obviously taking the plunge and moving at-risk consumers to prepaid meters before providing them with the help they are entitled to; I just can’t believe that every conceivable opportunity has been exhausted in all those cases.
“I am deeply troubled by reports that consumers have been transferred against their will to prepaid meters, and some have been forcibly disconnected and literally left in the dark.
“Instead of immediately looking for a new way to extract money from visitors, I need providers to stop this practice and pay more attention, providing the kind of tolerance and that a vulnerable visitor who is suffering to pay deserves to be able to wait. “
The government has resisted calls for a moratorium on forced replacement of advance payments, saying this could simply lead to a backlog of marshals as providers try to collect debts from families with unpaid arrears.
Some energy providers are already taking steps to help consumers, for example by postponing the remote transfer from smart meters to prepaid or by granting more credit to consumers who are struggling to pay. The government needs all providers to develop these types of systems to avoid resorting to forced arrangements.
Providers are also being asked to redouble their efforts to ensure that families use vouchers issued under the government’s energy bill program to take advantage of relief on their energy bills.
The government says 71% of vouchers have already been redeemed and has published a list of vendor redemption rates that indicates which corporations are taking on their responsibilities and which want to do more.
At the most sensitive point on the list for the maximum number of vouchers redeemed is E Gas
A summit will be held in the coming days involving the government, suppliers, regulator Ofgem, industry framework Energy UK and charity Citizens Advice. On the agenda will be a plan to combat so-called “bad behaviour” by energy suppliers. In addition to publishing usage rates from the right vendors, this includes:
Ofgem said it had the power to ban the installation of forced prepayment meters, but pledged to examine:
He said that when he finds that the companies have not done their due diligence, he will take legal action. It’s about reviewing the rules regarding when a warrant can be issued and what steps to take first.
The regulator will also present what it calls a “serious assessment” of the concept of social tariffs. This would be more for consumers with financial needs and has been presented through industry figures as a way to address the affordability issues of energy bills.
Ofgem will explain how such a fee would be administered, adding how other people would be eligible, how the subsidy would be paid and through whom.
Jonathan Brearley, chief executive of Ofgem, said: “If [a social tariff] can work, it could address the root cause of this challenge and the misery many consumers find themselves in this winter. “
Market analyst Cornwall Insight has lowered its forecast for Ofgem’s energy price cap for the rest of this year due to declining wholesale energy prices, writes Candiece Cyrus.
The limit on which suppliers can rate domestic consumers by energy pools and constant prices is set through the regulator every three months with reference to prevailing wholesale energy prices. For the period January-March 2023, it amounts to £4279.
Cornwall Insight predicts it will first rise from its current point of £3208 in April, before falling further to £2201 in July and then seeing a slight rise to £2241 in October.
The immediate increase in the cap in the second half of 2022 prompted the government to introduce the guaranteed energy value in October. At present, this lowers the limit and means that the annual expenses of a family with an average income amount amount to around £2500 until April 2023, when the guarantee limit is expected to increase to £3000 for an additional year.
However, if the limit falls below the point of the Guarantee, the Guarantee becomes redundant and suppliers must meet the limit again.
Ofgem commented: “While the Energy Price Guarantee will continue to apply, it will be placed on consumers’ most sensible bill, and consumers will be charged the EPG or maximum value rate, whichever is lower.
“In the event that the value cutoff point falls below the EPG point, providers must still overcharge consumers above the value cutoff point. “
Despite the revised forecast, the value limit will remain well above its £1,227 point before last year’s energy crisis.
Dr Craig Lowrey, senior consultant at Cornwall Insight, said: “We don’t know what will happen in the coming months and there is a long way to go before we can be sure what the true unit rates will be beyond the summer.
“So, while falling wholesale markets and capitalisation forecasts could be a celebratory explanation, nothing is guaranteed in this new European energy market. Reading too much, too soon, about the accumulation of value can also be just as risky as reading too much, too soon, about something worth building.
“Politics wants to be ‘attuned’ to sudden changes and to be elastic and responsive in that environment. “
Energy providers continue to require their customers, including other people with disabilities and those with long-term physical conditions, to use prepaid meters, according to Citizens Advice.
Under market rules, providers cannot impose prepaid plans on the most vulnerable people, such as other people with disabilities. The regulator, Ofgem, only authorises this measure as the last resort to debt, if the visitor is not in a vulnerable situation. situation. The regulator reminded suppliers to comply with the rule last October.
However, Citizens Advice says providers are directing consumers with disabilities to prepaid plans and that a large number of consumers with electrical disabilities are unable to collect.
There are around 4. 5 million households with prepaid meters in the UK, of which around 1. 4 million are
including a user with a long-term medical condition.
Citizen Council reports that, in the month following Ofgem’s warning in October, around a third of them – 470,000 homes – were left without electricity because they could not be filled.
More broadly, Citizens Advice estimates that 600,000 families were forced to use prepaid meters because they may not be up to date with their energy bills in 2022. This includes providers remotely switching family meters to prepaid plans, without the need to manually install a new one. meter.
An estimated 160,000 families could be forced to use prepaid meters until the end of this winter if no action is taken.
Overall, the study found that 3. 2 million families across the UK had no credits on their prepaid meter last year because they may not have updated it. Most of those families (two million) may simply not do it more than once. , while nearly a fifth (19%) spent at least 24 hours without fuel or electricity.
In 2022, he says he saw more people who couldn’t qualify their meters than in the last 10 years combined.
The agreement calls for a ban on the mandatory installation of prepayment meters until new protections are put in place to prevent families from running out of fuel and power if they don’t have the means to obtain credit.
Last week, the Resolution Foundation said other people with disabilities were disproportionately affected by emerging energy costs.
The think tank’s Costly Differences report, which includes a YouGov survey of about 8,000 working-age adults, adding 2,000 who reported a long-term illness or disability, found that 48% of other people with disabilities surveyed had to use their energy this winter. .
Thousands of businesses are at risk of caving in following the government’s decision to cut their energy costs, business leaders have warned, writes Candiece Cyrus.
The government has announced that it will update its existing commercial energy expenditures with a new energy bill relief program starting April 1, 2022.
The Federation of Small Businesses (FSB) said: “While the new year deserves to be a time of optimism and excitement, 2023 turns out to be the beginning of the end for tens of thousands of small businesses, which rely on government power to survive. . This winter. “
Instead of a price cap proposed under the current Energy Bill Relief Scheme (EBRS), the new plan, which will last until 31 March 2024, offers a wholesale unit charge for energy.
Since the rebate only comes into play when wholesale energy prices exceed a certain “floor price,” corporate representatives deemed it “negligible. “
For most businesses, the electricity discount will be set at £19. 61 per megawatt-hour (MWh) with a “price threshold” of £302 per MWh.
For gas, the maximum will be £6. 97 per MWh with a price threshold of £107 per MWh.
Companies with energy prices below those grades will get support.
Martin McTague, national chairman of the FSB, said: “For those who are struggling, the reduction presented through the new edition of the programme is not significant. Many small businesses won’t be able to do that with the few pennies provided through the new edition of the program. “
He added: “It’s so disconnected from reality. A relief of two pence for a kWh of electric power and part of a penny for fuel is absolutely negligible for small businesses, even if it costs taxpayers billions. “
On the other hand, companies that rely heavily on energy, such as glass, metal, and ceramic producers, will gain advantages from a larger reduction.
For electricity, it will be £89 per MWh with a price threshold of £185 per MWh and, for gas, £40 per MWh with a price threshold of £99 per MWh.
The existing EBRS, which caps the unit energy tariff, was introduced in October 2022 as a six-month transitional measure to protect businesses from skyrocketing energy tariffs.
The government said it had clarified that “these degrees of protection are of limited duration” and “are not finished to serve as a bridge for businesses to adapt. “The existing plan will be finalized as planned on March 31, 2022.
Mr. McTague said, “The existing EBRS program provides certainty to small business homeowners about their rates and has made a difference in the survival of many small businesses. The replacement program will do neither.
The announcement of the new program comes on the heels of wholesale energy costs falling to levels prior to Russia’s invasion of Ukraine in February 2022, before sanctions on its fuel exports caused energy costs to skyrocket (see update below).
Wholesale fuel is reaching levels never before Russia’s invasion of Ukraine in February 2022 pushed them to record levels last year, according to figures from knowledge firm Refinitiv, writes Candiece Cyrus.
This has led customer teams to understand why household and business energy expenses remain at high levels and do not reflect developments in the wholesale market. According to industry figures, the cause of this is the practice of hedging, in which providers buy shares months in advance.
The war in Ukraine and global sanctions on Russian fuel exports have sent energy expenses soaring, prompting the UK government to introduce an Energy Price Guarantee (EPG) for domestic consumers in October 2022.
Until then, typical household expenses were restricted by the value limit set by industry regulator Ofgem. But when it became clear that the limit would exceed £3,500 a year for average expenditure, the government stepped in by introducing the EPG to cap average annual expenditure at £2,500.
Ofgem’s new limit, which came into force this month, stands at £4,279 per year for the average household. However, the EPG will remain at £2,500 until April, and then increase to £3,000 until March 2024.
The relief in wholesale prices is partly due to the EU buying larger quantities of liquefied natural gas (LNG) as an alternative to Russian fuel imports from countries such as the United States and Qatar.
This, coupled with the fact that the UK and other European countries have been striving to increase the grades of fuel stored ahead of the winter months, has caused wholesale fuel prices to plummet.
Thanks to the temperatures of the last few weeks, the drop in fuel demand has led to a further drop in prices.
Yesterday, Refinitiv recorded the value of fuel purchased for delivery in the UK next month at €72. 40 per megawatt hour. When Russia invaded Ukraine on February 24, 2022, the price of fuel skyrocketed to €134. 31 per megawatt hour, peaking at €339. 19 consistent with megawatt hours on August 26 last year.
Yuriy Onyshkiv, principal analyst at Refinitiv Gas Research, said: “An incredibly hot December even helped some countries resume injections in garages for nearly two weeks in late December, an unprecedented progression for winter, where recalls predominate. “
“All of this has given confidence to the market and weighed on prices. “
Ofgem is asking suppliers to buy energy in bulk weeks and months in advance to secure supply, so that existing retail costs reflect last autumn’s peak costs. The current decline in wholesale costs will not be reflected in household expenditures until the end of this year.
Today, analyst Cornwall Insight announced its latest energy price cap forecast from Ofgem, taking into account lower prices.
It predicts that the cap, which is adjusted quarterly, will fall to £3,545 per year, from £4,279 per year in April, but fall to £2,800 per year in July. As a result, the EPG, which is expected to rise to £3,000 compared to the previous year in April, would be superfluous from July.
In October, Cornwall Insight predicts that the cap will rise to £2,835 for the year.
Financial company Investec forecasts similar figures: £3,458 per year in April, £2,640 per year in July and £2,704 per year in October.
Octopus has completed the acquisition of Bulb, the bankrupt powerhouse that was forced to take on special management in November 2021, writes Kevin Pratt.
The special management created through the government and the energy regulator, Ofgem, to protect consumers in the event of the bankruptcy of a giant supplier like Bulb. With 1. 7 million consumers, Bulb represents too great a burden for other electric corporations to absorb. in the midst of the energy crisis, in which some 30 suppliers closed their doors in 18 months.
Suppliers went bankrupt because wholesale energy prices were higher than their consumers could qualify for due to Ofgem’s price cap, which was in place at the time.
The Bulb’s special administrative arrangement is said to charge up to £4 per billing, with the final bill being paid through taxpayers and a tax on energy bills.
In its visitor blog, Bulb states: “The sale of Bulb’s power source business to Octopus Energy is now finalized. Our members don’t have to do anything.
“When it’s time to make a transfer to Octopus, get new top points about your account. Octopus will send you all the main points on how to create an online account and download their app. Until then, your Bulb account number will remain the same, and you can continue to use your Bulb app and account.
“If you are a former member with a debit or credit balance on your account, your energy provider will be affected and that debit or credit balance will be transferred. “
More than 25,000 Utilita prepaid consumers will get £20 meter credits as payment for not receiving them when they first applied for them, writes Candiece Cyrus.
Regulator Ofgem requires energy companies to offer assistance to vulnerable customers, such as the disabled and the elderly, if they have no other way to top up their meter.
Ofgem says Utilita did not take individual cases into account when deciding whether or not to give additional credit to consumers who are suffering from significantly increasing their prepaid meters.
The supplier will also donate £321,740 to the Energy Redress Fund, which supports energy consumers in difficult situations.
Ofgem imposed the refund after reviewing recorded calls between Utilita workers and customers, as well as the company’s educational materials, procedures and policies.
Cathryn Scott, Ofgem’s Director of Applications and Emerging Factors, said: “Around 4 million UK families currently rely on prepaid meters, and the current life factor charge is putting pressure on many families, which in turn is causing more people to apply for additional credits for smart people to increase their prepaid meters.
“While Utilita acted temporarily to fix those issues and agreed to compensate those affected, this action deserves to remind other providers that they need to do more to make sure certain vulnerable teams get the help they need, especially in the colder winter months.
Anyone who receives supplemental credits from their provider must pay them the next time they refill their meter. If this is not possible, you will be presented with a manageable payment plan.
Industry regulator Ofgem has unveiled a five-year investment programme worth £22. 2 billion to make Britain’s electricity grid cheaper, cleaner and more reliable, writes Candiece Cyrus.
Infrastructure investments during the period from April 1, 2023 to March 31, 2028 will be made by extending network fees on visitor bills. Households will continue to pay £100 a year.
Rather than passing prices on to households, Ofgem expects the six corporations that manage the UK’s electricity distribution networks (Electricity North West Limited, Northern Power Grid, National Grid Electricity Distribution, UK Power Netpaintingss, SP Energy Netpaintingss and Scottish and Southern Electricity Netpaintingss) to return and paint their investors to make their operations more efficient.
The regulator also hopes that corporations will use the investment to incentivise the UK to abandon its heavy reliance on imported fossil fuels, natural gas.
To this, the regulator said adjustments to the way energy is used and stored will be necessary to allow the use of greener resources such as wind, solar and wave energy.
Ofgem says the advent of an efficient and greener grid will anticipate an increase in demand for electric power due to the increased number of heat pumps used in homes and the rise of electric vehicles (EVs).
The sale of new petrol and diesel cars will be banned in the UK from 2030 until the end of the decade.
Ofgem said “smart” and virtual technologies will give consumers more control over their energy use, allowing them to take advantage of up-to-date price lists at off-peak hours or avoid peak costs. Electricity costs will vary more to reflect fluctuations in climate-dependent renewables. generation.
Households will also be able to sell electricity to the grid in periods of low energy production, from resources such as electric vehicle batteries.
Akshay Kaul, acting director of infrastructure and security at Ofgem’s source group, said: “The energy economy has changed, and cleaner, locally grown renewables such as wind and solar are less expensive than expensive imported gas. Combined with more nuclear power and potentially hydrogen-electric power, these renewables will contribute to a low-carbon energy mix, better due to geopolitical events and energy price crises.
Gillian Cooper, head of energy policy at Citizens Advice, said: “Networks have been allowed to make top profits for far too long. In the midst of a cost-of-living crisis, Ofgem is right to challenge them to run as successfully as possible, which will help reduce people’s bills.
“Today’s announcement shows some progress toward a higher cost for consumers. It also means that grids can be key to infrastructure so that there is capacity to connect electric vehicles, heat pumps and wind farms, helping to ensure the transition to net zero emissions.
“However, the benefits of the network will still be too high and the targets too easy. Ofgem may have gone the extra mile and reduced people’s spending by at least £1. 5 billion.
The government is contributing £18 million to its domestic aid campaign to inspire others to save energy and reduce their bills, writes Candiece Cyrus.
The £18 million crusade includes energy-saving tips such as sealing windows and doors, reducing the temperature of boiler water and cutting radiators in rooms not in use.
The government says the campaign will enable the UK to meet its target of reducing energy consumption by 15% by 2030. It will also target other vulnerable people, such as retirees and others with disabilities, with recommendations on how to safely make cost-effective adjustments. energy consumption this winter and beyond.
Business Secretary Grant Shapps said: “Our new public data crusade will give other people the equipment they want to use their energy while staying warm this winter. “
Gillian Cooper, head of energy policy at Citizens Advice, said: “People want transparent and consistent recommendations on how to reduce their energy use safely. We look forward to seeing how the government will make sure everyone has the data they want to do so.
“But this is only part of the solution to the monetary pressures that other people face. Some people we help are taking desperate steps to reduce their expenses, such as turning off the heat despite a physical condition that requires them to stay warm.
“An energy-saving crusade will have to be accompanied by monetary continuation for those at the height of this crisis. “
Congressman Grant Shapps, the business secretary, has written to electric corporations to warn them to overestimate the fees charged to consumers for preauthorized withdrawals, writes Candiece Cyrus.
In the letter sent over the weekend, Shapps said: “It is imperative that consumers are able to manage their spending effectively, and direct debit can be an effective way for households to reduce their energy prices throughout the year.
“It is in our best interest that when consumers take moderate steps to reduce their own bills, such as reducing the flow temperature of their boiler or making their homes more energy efficient, they can see an effect on their bills.
“I’m keen for all vendors to find a way to make their systems more responsive to those positive adjustments in customer habits and I’ve asked Ofgem to let me know how to do that.
“As other costs rise for households, it’s imperative that we do what we can with them. I’m curious to see how you plan to make sure your pre-authorized debit formula doesn’t overdo the fees.
Although direct debit is the least expensive way to pay energy bills, providers would possibly overestimate rates because they are based on an estimate of a household’s consumption over a year.
Energy consumers will need to provide their suppliers with normal energy readings to ensure that their expenditures reflect the fuel and electrical energy they use.
Industry regulator Ofgem looked at how suppliers adjusted direct visitor debits earlier this year and found that 17 large corporations had “moderate to severe weaknesses” in their processes. See the July 13 update below.
Ofgem said it was collaborating with businesses to carry out procedures and rethink direct customer debits where necessary.
Energy consumers can challenge their supplier if they increase the amount of their direct debit. They will have to request the readings of the meters used and check that they are the same as those on their bills. They will be able to claim reimbursement of the amounts due if they have been overcharged, by means of a refund, reduced direct debit or in the form of a credit to their account.
The government is launching a £1 billion scheme to fund the insulation of homes in the least energy-efficient homes, which is expected to save other eligible people up to £310 a year in energy costs, writes Candiece Cyrus.
The ECO program, which will run from spring 2023 to March 2026, will target households with an Energy Performance Certificate (EPC) score of D or less, and those in the reduced housing tax brackets, up to and adding bracket D.
This includes families who do not get government assistance under existing programs, such as ECO/ECO4, which provides subsidies only to those living in social housing, with low incomes, who are in energy poverty, and want assistance to carry out energy-efficient projects. . improvements to their homes.
20% of the funding will also go to the most vulnerable energy customers, such as those receiving means-tested subsidies and those in energy poverty.
EPCs show the energy output of a building, a score ranging from A (very efficient) to G (inefficient). Energy consumers are considered fuel-deficient if their home has an EPC score of D or lower and if their residual source of income falls below the official poverty line once they pay to heat their homes.
Jeremy Hunt, Chancellor of the Exchequer, said: “In the long term, we want to make Britain more energy independent by generating local, cleaner energy, but we also want more efficient homes and buildings.
“Our new ECO programme will help thousands of people across the UK better insulate their homes to reduce their consumption, with the added benefit of saving families many euros a year. “
Industry regulator Ofgem has introduced a package of reforms aimed at reducing the threat of energy suppliers going bankrupt in volatile market conditions, writes Candiece Cyrus.
Ofgem wants to protect energy consumers by ensuring the financial stability of companies. It sets a minimum amount of money that suppliers will have to keep in the bank to better deal with market crises.
Thirty energy suppliers have gone bankrupt since the start of the current energy market crisis in August 2021, caused by a drop in wholesale energy prices. This has forced Ofgem to move millions of consumers to new businesses, costing taxpayers, according to National Audit Office estimates. (NAO), £2. 7 billion.
The largest bankrupt provider, Bulb, was placed under special management in November 2021 because no other company was willing or able to serve its 1. 7 million customers.
After lengthy negotiations, it was agreed that Bulb consumers would now turn to energy supplier Octopus (see October 29 update). The cost of the special arrangement has been estimated at £3 million, and payers will again foot the bill.
To prevent further business bankruptcies, Ofgem has tightened restrictions on how suppliers can use visitor credit balances after finding that some businesses had used cash from accounts receivable to fund their business operations.
Jonathan Brearley, chief executive of Ofgem, claimed this summer that visitor balances “are being used through a kind of interest-free corporate credit card”.
The regulator will also allow money intended to be spent through renewable energy suppliers to be set aside for this purpose.
Brearley said: “The energy crisis has had a profound effect on the industry, its business models, our regulatory strategy and the way we think about risk.
“These proposals will provide protections, checks and balances for consumers, suppliers and the entire industry to create a safer marketplace. We need providers to be forward-thinking and dynamic, while ensuring their monetary stability and that customers’ cash is protected. .
Gillian Cooper, head of energy policy at Citizens Advice, said: “Ofgem will have to ensure that other people never again revel in the chaos and prices of various suppliers failing.
“It is imperative that these proposals lead to concrete adjustments that customers feel. The only way to do that is to put those new rules into effect.
Consumers do not interpret today’s announcement of a sharp increase in Ofgem’s energy value limit as an indication that their expenses will increase.
The energy regulator has shown that its cap will be set at £4,279 for 3 months from 1 January 2023 for an average family with income paying by direct debit. The current figure is £3,549.
However, spending will remain limited thanks to the government’s energy value guarantee, which came into effect on October 1.
This limits the average annual household bill to £2,500 for the period up to March 31, 2023. Ofgem says: “The point of the energy price caps indicates how much consumers would pay with their supplier’s base tariff if the price were not in effect. “
He added: “Consumers want to take immediate action as a result of today’s announcement. “
The cap is calculated with reference to wholesale energy costs and reflects the amount corporations pay to ensure their supply. The amount of the cap determines how much the government will have to contribute to reduce spending to an average of £2,500.
From 1 April, the guaranteed price will be set at £3,000 per year for average consumer households, regardless of the price cap in force at the time. Ofgem will announce this figure on 27 February.
Under existing plans, the government will withdraw its value guarantee on March 31, 2024.
The price guarantee does not limit expenses. It limits the amount that can be charged per unit of fuel and electric power and sets the constant rate for each percent. Actual expenses will be decided based on the amount of energy used.
Industry regulator Ofgem needs UK electricity corporations to do more for “vulnerable” consumers, such as those who have reached retirement age and those who are disabled, pregnant or living with an intellectual fitness condition, Cyrus writes.
Their most recent study found that five energy providers (Good Energy, Outfox, SO Energy, TruEnergy, and Utilita) performed the worst in terms of how they identify vulnerable consumers and whether they upload them to the Priority Services Registry, which supplies more to consumers who want it.
Five Corporations – E (Gas
Energy consumers will be treated as vulnerable through their suppliers if:
Customers registered in the precedence login can get assistance benefits such as loose fuel protection checks. If they’re having trouble seeing it, your provider can send your account and expense details in giant print or Braille. If they use a prepaid meter, their provider can ensure that it is safely accessible.
Customers can check exactly what is available by contacting their provider.
Ofgem has also learned about clever practices from some corporations, such as providing their consumers with monetary subsidies to pay their energy bills. Many corporations have also signed up to the UK Energy industry’s Energy body’s Vulnerability Pledge, which points to the source of help in this area.
Neil Lawrence from Ofgem said: “We welcome the cooperation from suppliers and the steps taken so far, and although we are seeing some practices in some parts of the industry, we can see that there is still a lot of work to be done.
“It’s going to be a very challenging winter for everyone, and customers must be confident they are getting the help and support they need. My message to suppliers today is simple – be proactive. Help your customers to know what support is available, and then deliver it.”
Gillian Cooper, head of force policy at Citizens Advice, said: “Given the enormous pressures other people are facing this winter, force providers deserve to do everything in their power to identify consumers who are struggling. “
“Citizens Advice sees day in and day out the heartbreaking consequences when this fails. People are cutting back on their food and essentials to cover their energy debts and living in cold, dark homes when they simply don’t have money left over to qualify their meters.
“Ofgem is right to hold electricity corporations to account – it will now have to ensure this review leads to concrete action. ”
Households and businesses with smart meters could be rewarded with discounts on their spending this winter if they reduce their electricity consumption at peak times, according to a scheme introduced today in England, Scotland and Wales, writes Candiece Cyrus.
The call for reaction flexibility service, designed by the National Grid Electricity System (ESO) and approved by regulator Ofgem, will offer discounts of up to £100 for households, £3 per kilowatt-hour and more for businesses.
Energy consumers will want to be with a supplier. Octopus, which last weekend took over the visitor base of the bankrupt company Bulb (see article below), has already shown that it will manage the system, having tested it earlier this year.
Others have consulted with ESO to offer the service to their customers.
Businesses will be required to monitor electricity consumption in real-time, meaning that only energy consumers with smart meters that can provide partial hourly readings will be able to participate.
The program will begin with a 12-day “trial” between November 3 and March 31, 2022. Participants will get two hours of performance in their electrical energy consumption for one hour between four p. m. and 7 p. m. de Monday through Friday.
Customers who replenish their use, such as their washing machine or dishwasher at select times, will get a discount.
ESO will pay the energy providers providing the service a minimum of £3 for every kilowatt-hour (kWh) of the trial periods. It is up to each company to decide how much of the sum it will use to incentivize its consumers and how the reduction will pass on to them.
Fintan Slye, ESO’s Chief Executive, said: “We are very pleased that Ofgem has approved the use of our Demand Flexibility service this winter. This will help mitigate the potential risks defined through ESO’s Winter Outlook and allow consumers to see a monetary benefit from reducing their electricity consumption at peak times.
The release of this programme follows a warning from ESO last month that it would possibly have to impose force cuts if demand for force exceeds source this winter, as the global strength crisis continues.
ESO is looking at how to scale up the formula to feed consumers who don’t have smart meters.
Concern is growing about the large number of consumers of classic prepaid meters who have not yet redeemed their first voucher to pay the price of energy under the government’s energy bill program, Cyrus writes.
The scheme offers a £400 reduction on all household electricity expenses between October 2022 and March 2023. For those with outdated prepaid meters, this means redeeming vouchers when reloading cards or keys.
Clients have already earned their October bonuses. Customers who haven’t won it yet touch their energy provider.
In a report for the BBC, payments service PayPoint says it plans to redeem vouchers worth £52. 8 million this month. However, it has only repaid £27 million.
The government is urging energy consumers to use their vouchers as they are valid for 90 days.
Recipients are expected to get a £66 instant voucher in November and a £67 monthly voucher between December and March.
Depending on their electricity company, consumers of classic prepaid meters deserve to receive them in the form of a voucher, either by post, SMS or email, or as automatic credits when recharging. Vouchers can be redeemed at post offices or post offices. 28,000 outlets offering PayPoint services across the UK.
Four million households use a ‘prepaid’ meter, and some of those households use older meters without smart technology, according to industry regulator Ofgem.
Customers who have a smart meter deserve to be automatically credited with their entitlement.
Households that pay their electricity in arrears through constant monthly direct debit expect their installments to be deducted from their bills, or the cash to be refunded once the bill is paid.
Those who earn monthly or quarterly expenses based on their energy usage will see the monthly payment as a deduction from their bill or as a credit to their balance.
While electric utilities can direct their consumers to prepaid meters when they’re struggling to pay their bills, those solutions tend to be more expensive than paying for overdue energy via direct debit.
Citizens Advice reported last month that the number of people who received help from the charity because they had switched to a prepaid meter had risen to 138 per cent in the past two years.
It predicts that prepaid consumers could spend £258 more than direct debit consumers on energy this winter.
Users of Bulb, the power company that received special control through electricity market regulator Ofgem in November 2021, will migrate to Octopus, a government-approved deal that was closed in the last 24 hours.
The 1. 5 million consumers involved will not have to take any action and the procedure must not involve interruption of their source or control of their accounts. All rate terms and credit balance situations will remain the same, and consumers will have to continue to bill the same way they do now.
Bulb’s customers are requested not to convert their companies at least until the business move ends in November. The vast majority of energy consumers across the country currently take advantage of their provider’s popular variable rate offers, with no less expensive offers available.
Octopus, which has an excellent reputation for visitor service, will continue to use Bulb’s technology and logo during an era of transition to ensure stylish delivery for Bulb visitors.
The agreement is the culmination of a competitive sale procedure conducted through the Special Administrators, Teneo. They were appointed to run the company because, at the same time last year, no other powerful company was willing or able to take on such a gigantic visitor base. given the charge of supplying them with energy under Ofgem’s then-current value limit.
Grant Shapps, the new business secretary, said: “This is a fresh start and means that Bulb’s 1. 5 million consumers can rest easy knowing they have a new potency in Octopus. “
Greg Jackson, CEO and founder of Octopus Energy Group, said, “We [Octopus and Bulb] started out as rivals, but we share the same mission: to drive a greener, less expensive energy formula with other people in mind. We know how important this is. ” It’s for Bulb’s unwavering consumers and committed staff, and we’re determined that Octopus can provide them with a strong home for the future. “
Light bulb consumers can receive more information about this offer and what it means for them on the Light Bulbs blog and regular updates on next steps on the Octopus Energy data page.
British Gas owner Centrica announced that it has reopened its natural gas garage facilities in time for winter, when energy demand in the UK increases, writes Candiece Cyrus.
Surplus vegetable fuel will be injected into the facility when prices are low and then used in periods of increased demand, such as the upcoming colder months, which the company says will help stabilize or reduce energy bills. Centrica resumed operations from Rough after five years, following technical upgrades made over the summer.
The facility, which is a fuel box in the North Sea 20 miles off the coast of Easington, Yorkshire, shut down in 2017 after problems were discovered in several of the 30 wells used to inject and extract fuel.
Although the paints done so far at Rough will only allow it to operate at 20% of its previous capacity this winter, this is enough to make it the largest fuel reserve in the UK, expanding the UK’s fuel storage volume by 50%.
It can store up to 30 billion cubic feet of fuel, which can then be distributed through the UK’s fuel network to households and businesses.
Chris O’Shea, Chief Executive of Centrica, said: “I’m very pleased that we’ve effectively returned the Rough to garage operations this winter after a really extensive investment in technical modifications.
“In the short term, we, the Rough, can support our energy formula by stockpiling plant-based fuel when there is a surplus and generating that fuel when the country wants it during periods of drought and demand spikes. Crude oil is not a silver bullet for energy security. however, it is a key component of a number of measures that can be taken to help the UK this winter.
National Grid warned earlier this month that power shortages would be the worst-case scenario, if power demand exceeds this winter, due to the existing global power crisis. See the October 6 update.
According to the North Sea Transitional Authority, the UK has some of Europe’s lowest fuel reserves in days. Germany’s reserves are 89 days, France’s 103 days and the Netherlands 123 days.
Resuming the use of crude oil is an approach used in the UK to ensure energy security. Earlier this month, the UK government issued more than a hundred licenses for oil and fuel extraction in the North Sea. Critics say the move is not in line with global warming goals.
O’Shea said Centrica’s long-term purpose for reopening the Rough plant is to “deliver a net-zero electric formula by 2035, decarbonise UK shopping centres such as the Humber region by 2040, and the UK economy by installing a net grid. “energy exporter again.
Prime Minister Rishi Sunak announced this week at Prime Minister’s Questions that he would not lift the ban on hydraulic fracturing, the questionable approach of extracting fuel from shale rocks in the ground, proposed through his predecessor, Liz Truss, in September.
He showed he would not attend the COP27 weather summit in Egypt next month.
New Chancellor Jeremy Hunt’s speech today on the government’s economic strategy includes an explosive announcement that the Energy Price Guarantee (EPG) will only work as originally planned until April 2023.
As detailed in the stories below, the EPG limits the tariff that suppliers can replace according to the unit of energy and related ongoing charges, putting the annual expenses of a typical household at around £2500. It is scheduled to continue until October 2024.
It is feared that the average energy bill for households without a government will exceed £4,300 in April.
Hunt also notified the Energy Bill Relief Plan, which supplies businesses and public institutions by reducing the wholesale price they can be charged. It will run as planned until April 2023, but any extensions will now be subject to careful consideration.
Both plans will now be subject to the Treasury-led review, and today the prime minister and chancellor said it would be irresponsible for the government to continue to disclose public finances to the unlimited volatility of foreign fuel prices.
In introducing the review, Hunt said the goal was to come up with a new technique that would charge taxpayers far less than expected while also ensuring enough for those who want it. He added that companies will target those most affected and that the new strategy will further inspire energy efficiency.
Mr Hunt mentioned the Energy Bill Support Scheme, which will reduce all household electricity costs by £400 by March. This is supposed to continue unchanged.
The Chancellor cancelled all the measures contained in the 23 September mini-budget of his predecessor, Kwasi Kwarteng, in favour of those that had already been implemented, namely adjustments to the stamp duty regime in England and Northern Ireland and the reduction of social security contributions. next month.
This means that the £400 relief package, which will reduce electricity costs by £66/£67 per month for six months, will remain intact.
The Energy Pricing Bill, which provides a legal basis for ensuring government power and similar measures introduced on October 1, was introduced in Parliament today with new proposals to restrict the amount of profits that can be generated by low-carbon electric power producers, writes Candiece. Cyrus.
The cost-plus-benefit cap will limit the amount that can be obtained through electric power turbines that use renewable and nuclear energy. The government is consulting on the main points of the plan ahead of its arrival in England and Wales next year.
Currently, wholesale energy prices are based on the highest rate of production, i. e. natural gas, the value of which has increased due to the war in Ukraine. It should be noted that all electric power manufacturers benefit from this advantageous tariff. even if they use a less expensive energy source.
This means that families do not benefit from the lower cost of generating electricity from renewables and nuclear power. The government aims to break the link between the use of vegetable fuel in electric power generation and the value of electric power generated by other means. .
In his research on the bill, energy market analyst Cornwall Insights said of the cap: “The program will be implemented on any surplus profits that renewable energy turbines make and will still allow them to hedge their prices and make adequate profits that reflect their operational output. . , investment commitment and threat profile.
The government has refuted claims that the formula would be a providential tax on energy producers, arguing that it is a tax on surplus income, on all revenue generated through businesses.
Introducing the bill in Parliament, Trade Secretary Jacob Rees-Mogg MP said: “UK businesses and consumers pay a fair price for energy. Faced with rising prices caused by Putin’s horrific invasion of Ukraine, the government is taking swift and decisive action. “
Under the Energy Price Guarantee, annual energy costs for families with admission qualifications will be around £2,500.
Without intervention, unit energy prices under trade regulator Ofgem’s value cap are expected to reach just around £3,550 this month, £5,400 in January next year and even more in April.
The new bill also provides legal standing to the Energy Bill Support Scheme, which provides £400 to eligible families to help pay for electricity during the winter, as well as the Energy Bill Relief Scheme for businesses.
It also covers the government for families who are not connected to the fuel grid and use selective energy bureaucracy, and guarantees that homeowners who get their power will be fined if they overrate their tenants for energy.
Energy providers Octopus Energy and OVO will pay their consumers for their energy consumption this winter, writes Candiece Cyrus.
Octopus Energy has designed a program that will praise consumers who reduce their consumption in specific two-hour time slots.
Only its 1. 4 million smart meter consumers and around 5,000 of its commercial consumers will participate with a limit on sending normal readings.
OVO will praise its consumers who use smart meters for their higher energy consumption during off-peak hours, between 16:00 and 19:00.
Octopus and OVO are among the energy providers that are contemplating working with National Grid to address the potential challenge of energy demand outstripping the source in the colder months.
Last week, National Grid warned that planned power cuts could be necessary in a worst-case scenario, as if power imports from Europe to the UK would be compromised due to the foreign power crisis. See updates below.
The task will also stimulate the use of energy from renewable resources by encouraging consumers to replace their consumption during off-peak hours. During peak periods, renewable energy resources are depleted, meaning that more energy produced from fossil fuels is shared on the grid.
Octopus Energy’s program, Saving Sessions, will begin next month and run in March 2023.
The supplier tested the formula between February and March of this year with more than 100,000 consumers who were contacted in advance to tell them two-hour periods that deserved to restrict their energy consumption as energy demand was high.
On average, visitors reduced their energy consumption by 0. 7 kilowatt hours (kWh) for every two hours per day. This saved them an average of 23p of time. Some consumers with expensive constant tariffs have saved up to £4. 35 per time.
However, this winter, the company says National Grid will likely pay between £3 and £6 per kWh of reduced consumption, with the average visitor being rewarded with £4 per kWh. Customers are likely to be paid more, on days when the network is at its most extensive.
Greg Jackson, chief executive of Octopus, said: “Rather than isolating entire areas of the country if we run out of gas, we can praise others who use less energy at peak demand.
“This way we can make blackouts a thing of the past and make prices affordable for everyone. “
While OVO and other energy providers are in talks with National Grid to offer similar programs, OVO will launch a separate trial program, Power Move, aimed at saving its consumers money and greener energy.
The program, which will run from Nov. 1 to March 31, 2023, will allow consumers using smart meters, which can demonstrate their energy consumption in real-time, to consume more energy between four p. m. This is the time when the average family typically uses 19% of the total amount of energy they consume in a day.
OVO will ask consumers participating in the program to reduce their average consumption of those hours to less than 12. 5% to help them use more renewable energy.
For an average family, this may require only three washes per week during off-peak hours. Each family that reaches the target each month will be rewarded with an average of £20.
OVO will contact its consumers with the program starting in mid-October.
Octopus Energy meter consumers can register online for their Savings Sessions program.
The Energy Networks Association, which represents the companies that operate the UK’s electricity and fuel infrastructure, has provided more important points on how the country could cope with power cuts this winter.
There would be no exemption from cuts for families who rely on electricity for their medical equipment. In such cases, individuals are asked to have sufficiently good support services and to contact their healthcare provider for additional facts and advice.
National Grid, which has overall responsibility for fuel and power supplies, warned earlier this week that coordinated and controlled national power cuts rather than random blackouts might be necessary if the demand for power outstrips the source (see story below).
No relief is planned at the moment, but National Grid has assessed what measures will be needed in the worst-case scenario caused by the lack of imported energy from Europe to the UK due to the foreign energy crisis.
Planning discounts ahead of time and notifying others ahead of time means purchases can be targeted to those who want it most. If an emergency power outage is implemented, consumers in some locations will usually run out of power for about 3 hours a day. .
The Network Association says “protected sites,” such as air traffic centers and giant hospitals with twists of fate and emergency departments, would be exempt from planned power outages in the event of an emergency.
Above all, residential consumers would not be exempt. This would mean that consumers who medically rely on electrical power to force their appliances would have to rely on the backup force resources they already have in the event of a power outage.
Customers who require a continuous supply of electrical power for medical reasons and who require medical assistance in the event of a forced outage are requested to seek the recommendation of their local fitness service provider.
If the resolution is made to implement emergency force cuts, public data statements will be made and consumers will need to find out if and how they are affected on this online page, www. forcecut105. com, by entering their zip code.
National Grid remains confident that there will be a good enough source of electrical power during the winter without wanting to introduce power outages. As detailed below, it introduces the Demand Flexibility Service to incentivize families and businesses to reduce their electricity consumption between peaks. From 4:00 p. m. to 9:00 p. m.
From November 1, the scheme, which will be controlled through energy providers, could allow families with smart meters to pay up to £10 per day for off-peak device usage.
Fears of power outages this winter have prompted National Grid to expand a program that will praise energy consumers who reduce consumption if the grid infrastructure provider finds that the gap between demand and available source is narrowing.
The call for reaction service, which will begin on November 1 and run until March 2023, was designed through National Grid in collaboration with energy providers, market regulator Ofgem and the government.
Energy-intensive industries are the main target of this service; Suppliers would likely be offering “uptime” incentives to families who, for example, use appliances such as washers and dryers outdoors during peak usage periods.
Participants would need smart electric power meters that would allow them to monitor their consumption behavior in real time. Reports suggest that taking full credit from the programme may be worth just £10 a day.
Providers are encouraged to get their consumers fully involved in the program from the start.
National Grid says that, without the proposed consumption reductions at peak periods, cold days with little wind to power wind turbines may simply lead to the need to “disrupt supply to certain consumers for limited periods of time, in a controlled and controlled manner. “”
It says power cuts would be inevitable if the UK’s source of electricity and vegetable fuel from Europe were to be disrupted: “This would mean that some consumers could be left without electricity for predefined periods over the course of a day; In general, this is supposed to last 3 hours. Blocks of hours.
“This would be necessary to ensure the overall protection and integrity of electric power across Britain. Every conceivable mitigation method would be implemented to minimize disruptions.
Providers would be guilty of identifying “vulnerable” customers, such as those who rely on electrical medical equipment. However, only key infrastructure points, such as air traffic hubs and emergency and unexpected case facilities, would benefit from uninterrupted supply.
Increased use of coal-fired power plants is also planned to secure supply.
The root cause of the challenge is the shock in Ukraine and what National Grid calls “unprecedented turmoil and volatility in energy markets in Europe and beyond and fuel shortages in continental Europe. “
According to the report, such measures may have a variety of consequences in Britain, adding force cuts, and wholesale costs will remain at record levels for the foreseeable future.
Today, October 1, marks the first day of the Government’s Energy Price Guarantee, the replacement of the value limit controlled by Ofgem, the market regulator, since its creation in 2019.
The Guarantee limits the amount suppliers can charge per unit of fuel and electrical energy used by a family in the UK, as well as the constant value of the fuel. It will be in effect for two years.
Above all, it does not limit the amount of the expenditure itself. The amount owed to suppliers will be decided by the amount used.
The £2,500 annual figure associated with the Guarantee is the amount of a typical annual bill for a household with an “average” annual consumption: 12,000 kWh of fuel and 2,900 kWh of electricity.
Average spending under Ofgem’s cap, had it come into effect today, would have reached roughly £3,550 before returning to around £5,400 in January and even more in April.
The increase in expenses is attributed to the sharp increase in the value of vegetable fuel in wholesale markets, attributed in turn to the disruption of the shipment of materials from Russia to the West following the war in Ukraine.
Even if the guarantee provides very large savings on Ofgem’s abandoned limit, it will still incur higher costs than the limit that ended on September 30. This puts the average annual expenses at £1,971.
According to Citizens Advice, debt problems may cause energy providers to switch more than 450,000 consumers to prepaid meters this winter.
The charity says the 4 million families with prepaid meters are likely to spend £258 more in the coming months compared to those with credit meters who pay in arrears via direct debit, cheque or cash.
As was the case with the past value limit, under the Energy Price Guarantee, consumers of prepaid meters will pay a higher unit value than those with credit meters.
All families will also benefit from a one-off £400 reduction in their electricity bills, implemented during the months of October 2022 to March 2023.
This will reduce the bill to £2100.
Those connected to the fuel grid will get £100 for the charge of the fuel they use as an alternative.
You can locate all the main points of the Energy Price Guarantee, as well as a history of Ofgem’s unfortunate limit, in this Q&A segment and in the policy below.
The government is expanding its aid to advertising energy users through the Energy Bill Support Program; Again, locate the main points below.
Energy companies are questioning how they treat vulnerable consumers and those struggling to pay their expenses following the publication of a study by regulator Ofgem.
It’s about identifying those struggling, offering more help, and conducting more checks to make reimbursement systems realistic for customers, Cyrus writes.
Ofgem found that TruEnergy, Utilita and ScottishPower have “serious weaknesses” in the way they treat consumers with payment difficulties.
Its most recent market compliance review found that five other corporations (E, Good, Green Energy, Outfoxthe Market, and Bulb) were experiencing issues in supplying consumers who are having trouble paying their bills.
Eight suppliers (Ecotricity, EDF, E. ON, Octopus, OVO, Shell, Utility Warehouse and So Energy/ESB Energy) have “minor” problems.
Only British Gas “has no problems”. Utilita and ScottishPower get paint orders, not easy “specific and urgent actions”.
In July, Ofgem issued an interim order to TruEnergy requiring it to take steps to make its direct debit policy and processes compatible with the target and that direct debits from visitors are set at the correct rate level. No further action has been taken against the corporation at this time.
Ofgem’s most recent market research found that, across the industry, issues ranged from poor education on how to identify vulnerable consumers (those who have reached retirement age or are disabled, for example) to a lack of clarity on how repayment plans are re-evaluated if repayment plans are re-evaluated. A customer’s scenario changes.
The regulator sent data on practices to all energy suppliers, accompanied by a letter outlining its expectations, including:
Jonathan Brearley, Chief Executive of Ofgem, said: “We looked at how suppliers are helping consumers who are struggling to pay their bills, i. e. those who are vulnerable, and found that some suppliers were not meeting the expected criteria through Ofgem.
“We accept that there will be a lot of pressure on utilities in the market this winter, but the wishes of vulnerable consumers will have to be among their most sensible priorities. We will now work with companies to see where they can improve.
Dame Clare Moriarty, chief executive of Citizens Advice, said: “Today’s review reinforces what suffering customers already know: some electricity corporations are not up to the task. This is absolutely unacceptable given the enormous pressures other people face due to the cost of living.
“Suppliers want to improve and Ofgem wants to hold them accountable. With a difficult winter ahead, we’ll also have to ban backdoor disconnection tactics such as pushing other indebted people to use prepaid meters. “
Data from Citizens Advice revealed that more consumers are unable to increase their prepaid meter this year compared to the last three years combined.
The charity’s Market Meltdown report found that the number of Ofgem workers turning to consumers for poor supplier practices fell by 25% between 2017/18 and 2020/21, despite there being a record number of electricity corporations in the market at the time.
From 1 October, the government will freeze energy costs at £2,500 a year for the next two years, for the average family, and the family will also receive a £400 reduction on their electricity bill between October and March 2023.
Low-income families would possibly also be eligible for cost-of-living subsidies.
Ofgem’s next market on visitor vulnerability will be published later this year.
The U. K. government lifted the 2019 moratorium on hydraulic fracturing, a debatable approach to extracting shale fuel from deep underground.
This resolution was announced by the Prime Minister when she unveiled the power worthy of guarantee in the House of Commons on 8 September. Since then, details of the confirmation have been delayed during Queen Elizabeth’s mourning period.
Despite considerations about fracking’s connection to earthquakes, the strategy banned in the past will be allowed to resume following an announcement through the Ministry of Trade, Energy and Industrial Strategy (BEIS).
The branch says the end of the moratorium will help the UK’s energy security given the crisis in Ukraine, which has pushed up prices on wholesale markets.
Jacob Rees-Mogg, Member of Parliament and Secretary of State for Business Affairs, said: “In light of Putin’s illegal invasion of Ukraine and the militarisation of power, strengthening our energy security is a very sensible priority and, as the Prime Minister said – we want the UK to be a net exporter of energy until 2040.
“To get there, we’re going to have to explore all the avenues we have through solar, wind, oil and fuel generation, so it stands to reason that we’ve lifted the pause [on fracking] to tap into all prospective domestic fuel resources. “
Hydraulic fracturing involves drilling into the earth before injecting a high-pressure aggregate of water, sand, and chemicals into the rock to obtain shale gas.
This strategy made headlines when the founder of Cuadrilla, the UK’s first hydraulic fracturing company, said that British geology made hydraulic fracturing highly unlikely on any practical scale.
The clinical consensus on the dangers related to hydraulic fracturing has remained unchanged since the moratorium imposed in 2019.
Companies with hydraulic fracturing licenses will have to suspend operations if they encounter tremors with a magnitude greater than 0. 5. Earthquakes can be felt with magnitudes greater than 2. 0.
Danny Gross, an activist with Friends of the Earth, says fracking endangers communities and would have a negligible impact on household energy bills.
He said: “Repeal regulations that say other fracking people would send shockwaves through local communities.
“This announcement suggests that the government is ruining communities by forcing them to settle for ‘a higher degree of threat and disruption. ‘
The government has said that fracking activities will have to get local support. Developers will want to have the required licenses and permits in place before they can begin operations.
Business Secretary Jacob Rees-Mogg today provided more highlights of the government’s six-month plan for all UK businesses, charities and public sector organisations such as schools and hospitals, which are suffering with ever-rising energy bills.
The energy bill relief program will reduce the wholesale value of fuel and electric power for all non-household customers. It will be equivalent to the Energy Price Guarantee (EPG) for domestic consumers announced on 8 September by Prime Minister Liz Truss (see article below). ).
The new measures will apply to ongoing advertising contracts entered into from 1 April 2022, as well as to existing predetermined, variable and flexible price lists and contracts. No action is required on the part of bill payers to reap benefits from the settlement.
The corporate energy market has operated without the price cap introduced in the domestic market in 2019 and which will be replaced by the EPG on October 1, 2022.
The business energy billing formula will also apply to energy consumption starting October 1, 2022, and will continue until March 31, 2023. The government says businesses will see relief in their October bills, which are earned in November.
As with the national EPGs, the Government will apply a price reduction based on the kilowatt hour (kWh) of diesel and electrical energy supplied through services.
To this end, it has set a sustained wholesale price that is expected to be £211 per megawatt hour (MWh) for electricity and £75 per MWh for fuel (the value will be known on September 30). per kWh, 21. 1 pence for electricity and 7. 5 pence for fuel. The invoices would also include the supplier’s current expenses, as is the case recently.
The government claims that the sustained value will be less than a portion of the wholesale prices expected for this winter. Part of the plan’s funding will come from the abolition of green taxes that have recently been paid through non-residential customers.
From October, green taxes were also removed from household energy expenditures. The taxes will be temporarily financed by general taxes.
Reflecting the complexity of the national electricity market, the point of value relief for the corporate/charity/public sector framework will vary depending on your contract type and circumstances:
The six-month program will be reviewed after three months to determine if specific wishes will be provided to certain non-domestic customers after March 2023. The government’s internal program is expected to last for two years starting Oct. 1, 2022.
The hospitality industry has clearly pointed out the likelihood that pubs, nightclubs, and restaurants will close if no information is provided.
Kate Nicholls, head of the UK hospitality body, welcomed the announcement but said it would be needed beyond the six months of the new plan: “We will continue to work with the government to make sure there is no cliff edge when those measures fall. ” “
Rees-Mogg said the government would also focus on improving the UK’s energy self-sufficiency: “The steps we take to increase the amount of domestic energy we produce will boost security and generate growth, protect jobs and help UK families with their burden of living this winter.
Other main points have been revealed about the government’s Energy Price Guarantee (EPG), announced through the Prime Minister on 8 September as a way to restrict the average annual household bill to £2,500 for two years from 1 October.
On the same day that it provided the main points of its program to alleviate energy costs for non-household consumers (see story above), the Department for Business, Energy and Industrial Strategy showed that an equivalent fuel and electric bill would be provided to families in the north. Ireland.
Northern Ireland’s energy market is structured differently than the rest of the UK, and officials have used the time since the initial announcement to determine how to implement the measures.
The relief in the unit value of fuel and electricity in Northern Ireland will come into effect from November, but the government will roll back from October spending to November spending. No steps required to profit from the Array
All UK families, adding Northern Ireland, will also get £400 for spending in the six months between October 2022 and March 2023, bringing the average bill down to £2100 for 2022/23.
The scope of this relief will extend to park house citizens and tenants whose landlords pay for their energy in an advertising contract. The government will introduce a law to force certain landlords to pass on the reduction to tenants who pay bills all-inclusive.
An additional payment of £100 will also be made to more than one million UK families who are connected to the fuel grid and use select fuels such as heating oil, the value of which has also risen in recent months.
In her speech to the House of Commons last week, Prime Minister Liz Truss announced a package of measures for families and businesses facing overwhelming increases in their energy bills.
He also said the UK would achieve energy self-sufficiency through increased use of nuclear power, increased extraction of oil and fuel from the North Sea, an end to the moratorium on hydraulic fracturing, and continued investment in renewables such as hydrogen, sun and wind. .
The main problems with radical government intervention in the energy market include:
The Prime Minister did not provide important details on how the various measures will be financed; the Chancellor said last week that there would inevitably be an increase in government borrowing in the short term. Any prospect of a providential tax on the profits of energy producers has been governed through Mrs Truss.
The chancellor is expected to provide more important points when he draws up a monetary budget (well, a mini-budget) later this month.
Prime Minister Liz Truss has ruled out a providential tax on energy manufacturers as a way to help fund the multibillion-dollar charge of freezing energy bills. Details of how the government will tackle the energy affordability crisis will be announced through Ms Truss.
Asked today about the use of a providence tax as a revenue-generating mechanism, he said the UK “cannot tax its way to growth”, arguing that higher taxes on companies have a chilling effect on foreign investment.
This means that the funding for the measures to be announced will have to come from a tax on energy expenditure for the next few years or from general taxes.
Former Chancellor Rishi Sunak in May imposed a £9 billion levy on BP and Shell to help fund their cash relief package to tackle the cost-of-living crisis, adding to the £400 cut in the energy bill that each and every family is paying lately. It must be obtained in stages, between October and March 2023.
His new successor, Kwasi Kwarteng, has stated that it will be necessary to increase public borrowing to finance intervention in the energy market.
Mrs Truss promised “immediate action” on energy, saying she was seeking to give families confidence that they would be able to pay their expenses and get through the coming winter.
But he said the current scenario calls for more than just an “adhesive plaster” approach, with measures needed to breathe life into the UK’s strength through increased oil and fuel production in the North Sea and the structure of new nuclear power plants.
It is under pressure that would be put on companies, many of which have noticed that their expenses increased by as much as 500% when renewing their contracts. Unlike the internal energy market, there is no value limit to the companies’ energy source.
And in reaction to a statement by Victoria Atkins, Member of Parliament from Louth
The Prime Minister also said that in the face of the turmoil facing the energy market, she will examine how the market is regulated. Ofgem, the regulator, has been criticised by MPs and others for failing to respect the monetary soundness of energy suppliers. 29 of which have gone bankrupt in the last 18 months.
As well as ruling out a providence tax, Ms Truss told MPs she intended to oppose the increase in National Insurance contributions introduced through Truss. Sunak in April and prevent the proposed increase in corporate tax.
In her speech at 10 Downing Street the day before, Prime Minister Liz Truss vowed to take action to take on energy costs by the end of this week, blaming the energy crisis on Vladimir Putin and his invasion of Ukraine.
The planned 80% increase in the energy value limit on October 1 (from £1,971 to £3,549 per year for a family with the same usual consumption) is in the spotlight across the political and social spectrum, and the consensus is that urgent action is needed. . .
Ms Truss is reportedly finalising her plan to freeze costs at or near their current point for a period of 3 to six months. While this would be a huge relief for millions of families facing unaffordable bills, energy costs would still be painfully high.
The cost of government intervention – in the form of loans to energy suppliers to enable them to buy expensive fuel on wholesale markets without passing the cost on to domestic consumers – is estimated at at least £100 billion.
It is believed that this could be offset by levying a tax on domestic expenditures for up to two decades, a moot move, especially since there is no guarantee that wholesale costs will soon fall from their current levels.
Some are also calling on the government to act on the energy expenses of companies, whose charges are not capped. Reportedly, many businesses now face expenses five times higher than before. Inevitably, those higher charges trickle down to retail prices and fuel the accusation of experiencing a crisis: inflation reaches 10. 1% and, if forecasts predict it, it will rise even more.
The measures to be taken could simply come with the arrival of a cap on unit costs, or temporary relief or the suspension of the 20% VAT rate that most businesses pay on their energy bills.
Truss also said she wanted to see “shovels in the ground” as a way to improve the security of the country’s energy supply. In the absence of further details, there is speculation that this could be a sign of an upcoming green light for hydraulic fracturing. , the deeply debatable means of fuel extraction that critics say damages local property.
He also promised tax cuts along with investments in hospitals, housing, roads and broadband infrastructure, as well as an overhaul of the NHS.
In the cabinet appointments that followed this afternoon’s speech, Mrs Truss appointed MP Ki Kwarteng, who was business secretary under Boris Johnson, as Chancellor of the Exchequer. Congressman Jacob Rees Mogg has been named Secretary of Business.
Liz Truss, who will succeed Boris Johnson as prime minister (Tuesday), has vowed to “deliver on her promises” in the face of Britain’s energy crisis, while cutting taxes and developing the economy.
In his brief speech about the winner of the Conservative Party leadership race (she won 80,326 votes, compared to Rishi Sunak’s 60,399), he promised a “bold plan” to tackle the country’s economic problems.
Other main points of her proposals in relation to energy costs will be revealed later this week, although she said she would deal with “dealing with people’s electricity bills, but also the long-term challenge we have with energy supply”.
There are rumours that one option would be on Mrs Truss’s list: to freeze national energy expenditure at existing levels, with Ofgem’s predicted value cap by 1 October (see articles below) on hold.
This could cost around £100 billion, but that money could be recouped by a tax on energy expenditure over 15 or 20 years or, in part, by levying a provincial tax on oil and fuel companies.
There may also be more measures targeting low-income households.
Mrs Truss would possibly also need to provide relief to business users, who are already seeing costs rise due to there being no cap on business energy bills.
A measure in this regard could simply be the temporary exemption or the elimination of VAT on advertising energy bills. This would save businesses a maximum of 20% (VAT on domestic invoices is 5%).
As for addressing the issues related to energy sources, highlighted by the UK’s heavy use of expensive natural gas, Ms Truss could simply consider:
Sir Keir Starmer, leader of the Labour Party, said that “there can be no justification for not freezing energy prices”, stating that there is a political consensus in favour of such a measure and that Mrs Truss just needs to find out how to finance it. .
Labour is in favour of imposing a providential tax on the profits of oil and fuel producers.
OVO, the UK’s third-largest power and supporter of renewable electricity, has published a 10-point plan to fight emerging energy bills.
He says a “compassionate and creative” technique is needed to deal with the fact that families are not getting enough given the scale of the energy market crisis.
The regulator, Ofgem, announced last month that average annual values would rise from less than £2,000 to £3,549 when its value limit is adjusted on October 1, with a further increase towards £6,000 consistent with the expected year at the next limit update in January.
Prices are rising due to shortages of herbal fuel in wholesale markets, largely because Russia – Europe’s main source of supply – is choking on materials as it wages a war in Ukraine.
OVO says one strategy is to solve the disorders in the short, medium and long term.
In the term it says:
In the medium term:
In the term:
An announcement on how the government plans to tackle inflation and the cost-of-living crisis is expected early next week after new Prime Minister Liz Truss or Rishi Sunak takes office on Monday.
Ofgem, the energy market regulator, has announced that its price cap will be £3,549 on October 1.
The cap limits the amount of energy businesses can qualify for per unit of energy and for constant rates, and the new figure represents the cost of a typical household with annual expenses. This applies in England, Scotland and Wales.
The current cap is £1,971, and the massive backlog will leave millions of families struggling to pay their expenses this winter. Another increase is expected in January, due to high wholesale fuel prices.
Kevin Pratt, our energy expert, said: “Ofgem’s announcement that its cap will rise to £3,549 (and £3,608 for homes with prepaid meters) is not a surprise, but it is still a surprise to see energy expenses rise to just a timid level, three times what they were in March, when the limit was £1,277.
“The fact is that monthly energy prices of almost £300 a month are simply unaffordable for low- and middle-income families at a time when economy-wide inflation is running at 10. 1%. And as we know, the worst is yet to come. It will arrive in January, when the cap is expected to exceed £5,380, according to Cornwall Insight.
Incredibly, the analyst claims that it will surpass £6,600 when the cap is reviewed in April 2023.
“With millions of families facing energy poverty – with energy prices exceeding 10% of the disposable source of income – it is time to push for government intervention in what is obviously a market in deep crisis. This should take place now, well before winter, so that other people have the option of not being able to heat their homes when temperatures drop.
“Whether it’s state-guaranteed loans that would allow providers to freeze costs at the current point or the arrival of a subsidised social tariff for financially vulnerable households, this will have to be done by October and will have to be a precedent for the new government. Prime Minister when he took office on 5 September.
“In addition, we want to radically rethink how we manage our energy desires at the national level. Wholesale fuel costs are not going down anytime soon. We want a long-term strategy to expand reliable and affordable alternatives, adding nuclear power. And we want to make our housing stock, new and existing, more energy efficient to reduce our consumption.
The value limit applies to domestic properties. There is no limit for advertising energy users, who in some cases see contract values increase to 10.
This is plunging businesses into severe monetary difficulties, with growing fears that many will be forced to close their doors. Others will still not have the option to pass on their higher prices to their customers, fueling skyrocketing inflation.
Ofgem boss Jonathan Brearley, chief executive of Ofgem, said: “We know the huge impact that value accumulation will have on UK families and the difficult choices consumers will have to make now. I communicate with consumers and I know that the current situation news will be very concerning to many.
“The value of energy has reached record levels due to a competitive economic act by the Russian state. They have slowly and intentionally cut off fuel supplies to Europe, hurting our homes, businesses and the economy as a whole. Ofgem doesn’t have the selection yet to reflect those charge increases in the value cap.
“The government’s aid programme has been offering assistance lately, but it is clear that the new Prime Minister will have to do more to cope with the effect of the upcoming price increases in October and next year. We are working with ministers, customers, teams and industry on a set of features for the new Prime Minister that will require urgent action. The reaction will have to be proportionate to the scale of the crisis we are facing. With the right help in place and with the collaboration of regulators, government, industry and customers, we can locate a solution to this situation.
Ofgem’s average energy consumption is based on 2. 4 per year, 2,900 kWh of electrical energy and 12,000 kWh of fuel per year. This equates to 242 kWh of electrical energy and 1,000 kWh of fuel per month. Of course, this is only the average consumption of a family of 2 to 3 people.
British Gas will donate 10% of its long-term profits to its energy fund, with the money being used to offer grants to financially vulnerable customers. It immediately injected £12 million into the fund to revive the supply of additional energy in the face of the crisis. sky-high bills.
The company, a subsidiary of energy giant Centrica, made a profit of £98 million in the six months ended June. The parent company, which thanks to higher costs of selling the oil and fuel it produces, made a profit of £1. 3 billion. during the same period.
Ofgem, the energy regulator, will announce (Friday) an increase in the energy value limit, which will come into effect in October. The cap is expected to rise from its current point of £1,971 per year for a typical-use household to over £3500, before emerging in January to over £4200.
British Gas says subsidies are expected to average £750 per household: “This will be for the most financially vulnerable consumers who are struggling to pay their expenses this winter. “
British Gas consumers who are in energy poverty (those who spend more than 10% of their source of income on energy costs) and with less than £1,000 in savings can apply for a grant.
Grants of between £250 and £750 will be offered to help beneficiaries pay their energy bills. The average duration of the grant is £550. More than a third of recipients receive disability benefits, 30% are single parents and a quarter have children under the age of five.
British Gas already contributes £6 million a year from the fund, with additional contributions to fund express projects.
There are growing calls for Ofgem’s price cap to be frozen, and for price caps to be covered by government intervention (see article below). No announcement on the government’s policy to fight the energy crisis affecting domestic and advertising consumers is expected before the appointment of the next prime minister on September 5.
Shell Energy is reimbursing and compensating 11,275 prepaid consumers who were overcharged between January 2019 and September 2022. Refunds will be given to affected consumers.
Ofgem, the market regulator, says the total number of harmed visitors who need to be reimbursed is £106,000. The average amount reimbursed to affected consumers is £9. 40.
In addition, they will pay £400,000 to Ofgem’s voluntary customer repair fund and £30,970 in goodwill invoices to affected customers, equating to a total payment of £536,970.
In 2019, Shell Energy, then operating as First Utility, agreed to reimburse and compensate 12,000 visitor accounts that it had overcharged when Ofgem’s price cap was announced.
Keith Anderson, chief executive of Scottish Power, is leading efforts to secure the government a £100 billion plan that would freeze energy costs at existing values for two years and allow energy suppliers to pay for the existing wholesale value of natural gas in the markets.
According to data released through the BBC, Anderson has discussed his concept with MP Kwasi Kwarteng, the business secretary who is expected to be chancellor in Liz Truss’s government if she wins the war to lead the Conservative Party and, therefore, prime minister on September 5.
Ofgem, the energy market regulator, warns others to be wary of fraudulent emails sent on their behalf. In a tweet (24 August), he said: “There are reports of thieves emailing consumers telling them they are from Ofgem and asking to direct debit main points to reimburse the energy rebate of invierno. ES A SCAM Check out the links and get #ScamAware. “
The government’s winter energy payment of £400 discussed will be deducted from electricity expenses during the winter, so there is no need to submit any information to get benefits or receive them.
Anderson is due to share his proposals with Scotland’s First Minister Nicola Sturgeon and other power companies.
It is recommended that the government guarantee loans of up to £100 billion on behalf of energy suppliers, allowing them to borrow from advertising lenders at competitive rates. They would then use that cash to buy fuel at traditionally higher wholesale prices without passing on the charge. to consumers.
The government’s cash — called the “deficit fund” — would then be used to pay off debts, and the fund would be repaid through a tax on energy expenditures over several decades or through general taxes.
Under this plan, there would be no increase in the energy value limit from its current point of £1,971 per year for a typical family with average consumption. Ofgem, which administers the cap, will announce this Friday, August 26: the new point of the limit, which will come into effect on October 1.
Ofgem is adjusting the limit to reflect prices incurred through suppliers in wholesale markets. It is expected to be well above £3,500 in October before emerging in January 2023 and April 2023, and analysts say it could reach £6,000 consistent with the year due to rising wholesale prices.
These costs are largely influenced by reduced supplies from Russia, Europe’s largest supplier of vegetable fuel. Next week it plans to shut down the Nord Stream 1 pipeline to Germany for three days, ostensibly for reasons of regime maintenance, although Russia is suspected of being a source of constraints to cause political and economic unrest.
In February, Anderson recommended the arrival of a below-cost social tariff that is available to low-income families (see article below). However, the increasing magnitude of the most likely value increases threatens millions of high-income families with serious monetary difficulties. , hence the promotion of the deficit fund solution.
A director has resigned from her role at the UK electricity regulator in protest at changes to the way it sets the energy price cap, writes Andrew Michael.
Christine Farnish, non-executive director of Ofgem, submitted her resignation to the Chancellor of the Exchequer, Kwasi Kwarteng MP, in early August.
Farnish said he was leaving the position he joined in 2016 because he did not believe the regulator had “struck the right balance between the interests of consumers and those of providers. “
The cap limits the amount fuel and electric companies can qualify for power equipment and prevailing rates. It is expected to, specifically in October, exceed £3500 per year, up from £1971 today (for a family with typical consumption).
Consumer rights campaigners have warned that the move, coupled with an increase that would take it to over £4,200 by January 2023, would force millions of consumers into energy poverty, where energy prices account for more than 10% of their disposable income.
In early August, Ofgem announced that it was converting the price cap system to allow suppliers to shoulder the full burden of their consumers’ purchasing power at higher prices. It also announced that it would increase the limit from two to four reviews according to each year.
Rising energy costs have been a major contributor to rising inflation in the UK in recent months, exacerbating the cost-of-living crisis for the country’s families and causing interest rates to rise dramatically.
Earlier this week, consumer costs were reported to have risen 10. 1% in the year to July. The Bank of England warned that inflation could peak at 13% until the end of 2022 and remain at higher levels in 2023.
It is expected to report on interest rates at its next announcement on Sept. 15.
Ms Farnish told The Times: “I resigned from the Ofgem board because there may not be a key resolution to recover more prices from suppliers over customer spending this winter. “
Farnish’s departure is a major blow to the embattled regulator, which has recently come under fire from lawmakers on the Business, Energy, Industry and Science Committee who have been deeply critical of its functionality in recent years.
They said the collapse of the U. K. ‘s energy supplier market, in which 30 companies have gone bankrupt in the past 18 months and there are now no visitor value lists below the maximum value level, could have been mitigated by tighter regulation.
Ed Miliband, Labour’s spokesperson on climate updates and net zero, said Farnish’s resignation was “further evidence that the government is asleep at the wheel when it comes to the electricity bill crisis”.
The Labour Party weighed in on how to ease the cost-of-living crisis, saying it “wouldn’t allow other people to pay a penny more on their fuel expenses this winter. “
The current cap on energy costs, which amounts to £1,971 a year for those who use it, will increase to more than £3,500 from 1 October. The actual figure will be announced on Aug. 26 via Ofgem, the market regulator that sets the cap based on wholesale energy costs.
The cap is expected to be replaced from January 1, 2023, with analysts at Cornwall Insights predicting one point above £4200 (see below).
In a widely seen speech later that day, Labour leader Sir Keir Starmer will say his plan to prevent emergent spending this winter would “save the typical family £1,000 now, keep energy prices low in the long term and help fight inflation. “”.
The Labour Party says it would freeze the cap at its current level, partly covering the £29bn charge by levying more taxes on oil and fuel giants that it says are making “mind-boggling” profits. Rishi Sunak, when he becomes chancellor in April, would generate £8 billion, according to the Labour Party.
Critics say that power corporations like BP and Shell make the most of their profits from foreign trade, so it’s not easy to impose a providential tax on profits on the scale required.
Labour’s plan would also scrap the proposed £400 relief in household electricity costs, designed by the Conservative government and set to start in October. This would generate an additional £14 billion.
About £7 billion would be raised by cutting public debt due to inflation relief.
Rishi Sunak – who has lately been vying for the leadership of the Conservative Party with Liz Truss – has announced a £9bn providential tax on the profits of electricity companies, with the intention of paying for the £400 cut in bills.
Sunak and Truss have said responding to the cost-of-living crisis in general and emerging energy costs in particular would be a precedent if they win the leadership race and the premiership on Sept. 5.
Ed Davey’s Liberal Democrats have already called for the cap to be removed.
Labour’s proposed emergency measures come with a Warm Homes scheme designed to boost demands and reduce long-term spending by insulating 19 million homes across the country over the next decade.
It says that freezing the price cap will cause inflation to rise four percentage points from its current point of 9. 4%.
Sir Keir said: “The cost-of-living crisis in Britain is deepening, leaving other people worried about how they will get through the winter. Labour’s plan to save families £1,000 this winter and invest in sustainable energy in the UK to cover long-term expenses is a direct reaction to the national economic emergency that leaves families fearful for the future.
Another of the measures contained in today’s speech is the commitment that energy consumers with prepaid meters pay the same as others who pay their expenses in arrears.
Currently, prepaid consumers pay between 2% and 3% more (the existing prepaid limit is £2,017), with the difference attributed to higher prices from the administration of the prepaid system, which Labour says is justifiable.
Analyst Cornwall Insight raised its forecast for October’s price cap to £200, saying it will reach £3,582 per year for an average household with average consumption. This represents an 80% (£1,611) increase over the existing limit of £1,971.
Ofgem, the electricity market regulator, will verify the October limit on August 26. But the certainty of a bountiful backlog is prompting calls for the government to take urgent action to enable families to cope with burdens that for many will be unbearable.
The forecast for January 2023, when the cap will adjust again, is even bleaker, reaching £4,266. That’s £650 more than Cornwall’s previous estimate.
This sharp increase is partly due to high wholesale fuel and electricity prices. Ofgem is raising the cap to allow energy suppliers to pass on the increased costs of the market.
The bills will also rise dramatically following an update to Ofgem’s cap-setting system to allow utilities to recoup additional costs related to sourcing supplies in the long term.
Cornwall says the limit will return in April 2023, to £4,423, before falling to around £3,800 in the second part of next year. This figure remains particularly higher than last October.
Dr Craig Lowrey from Cornwall Insight said: “This new forecast for the January-March 2023 quarter further highlights the need for families who will struggle to pay their energy expenses this winter.
“An increase of more than £650 in the January forecast is a shock. The cost-of-living crisis is already at the forefront of the news, as more and more people face energy poverty, which will only rise to the next level.
Dr Lowery said the timing of the Ofgem upgrade is unfortunate, but it aims to prevent more utilities from going bankrupt, which would lead to additional costs for consumers. Around thirty energy suppliers have gone bankrupt since the beginning of 2021.
He argues that the very life of the limit deserves to be questioned: “Instead of criticizing the limit method, perhaps it would be time to think globally about the role of the limit. Of course, if it doesn’t reduce customer costs and undermine suppliers’ business models, we’ll have to ask ourselves if they’re fit for purpose, especially in these times of unprecedented situations in the electricity market.
“Right now, the existing value limit applies to consumers, to suppliers, or to the economy. “
Cornwall joined those calling for government action to help suffering households: “It is vital that the government uses our forecasts to drive a review of the customer support scheme. If the £400 [which will be deducted from all costs of electric power in stages between October and March] was not enough to diminish the effect of our previous forecast, in fact it is not enough now.
MP Rishi Sunak, who is running against MP Liz Truss to be elected leader of the Conservative Party and the next prime minister from September 5, has reportedly said he will increase the pay up to £400 if he wins.
Mrs Truss has not yet defined her policy on the matter, but has indicated that she will introduce tax cuts to help tackle the cost-of-living crisis.
Opposition MPs have called for higher taxation of electricity companies’ profits to fund measures to assist the most vulnerable. Some are also calling for VAT and green taxes to be removed from energy bills.
Ed Davey, leader of the Liberal Democrats, believes the government will completely abandon the value cap that is building up in October and fund the £40 billion burden through providential taxes and general taxation.
Another option proposed by industry figures and teams of interest to customers would be the creation of a “social” tariff aimed at low-income families and those who use gigantic amounts of force to force medical equipment.
This value would be particularly lower than the ceiling and would be paid for by deductions from other customers’ invoices or, again, by tax revenues.
It has been confirmed that the maximum amount energy suppliers can qualify per unit of fuel and electric power will be reviewed every three months, rather than every six months.
Energy regulator Ofgem officially went from revising its energy value limit two to four times a year. It says more regular updates will reflect changes in wholesale fuel and electricity prices more quickly and accurately.
The ceiling will now be reviewed every January, April, July and October.
Warning families of a “very complicated winter” ahead, Ofgem said the adjustments would stabilise the energy market and reduce the threat of more energy suppliers collapsing, an end result he said would further increase costs.
The current maximum value is set at £1,971 per year, in normal use. The next announcement of the value limit will be made through Ofgem on August 26 and will be implemented on October 1.
Energy market analysts, Cornwall Insight, expect the cap could reach £3,359 between October and December, and reach £3,616 between January and March next year.
The idea is that more common revisions to the cap could simply mitigate the “rocket and feather effect” on energy costs, where costs rise in line with wholesale costs but slow when costs fall.
Ofgem lead executive Jonathan Brearley said: “As a result of Russia’s actions, the volatility in energy markets we experienced last winter has lasted much longer, with tariffs much higher than ever before. This means that the burden of supplying electricity and fuel to homes has increased significantly.
“The trade-offs we have to make on behalf of consumers are incredibly complicated and there are simply no simple answers right now. Today’s adjustments to get the price cap to do its job, ensuring that consumers only pay the actual cost of their energy, but also that it can adapt to today’s volatile market.
Reacting to the news, Gillian Cooper, head of energy policy at Citizens Advice, said: “The shift to a quarterly value cap limits the risk of other suppliers going bankrupt, which is a smart thing to do. But our expenses are already incredibly high and continuing to rise.
“The government was right to provide monetary aid to the population, but it may not be enough to keep many families afloat. It will need to be in a position to react before winter sets in.
“Ofgem wants to make sure its suppliers help consumers who are struggling to pay. It holds electric utilities accountable so that other people aren’t chased by debt creditors or driven to prepaid meters when they can’t pay their bills.
According to the new forecasts, the average household energy expenditure is expected to remain above £300 per month until at least 2024.
Energy analysts Cornwall Insight say the default cap will take spending to more than £3,000 a year for at least the next 15 months, peaking at £3,649 until next summer.
The company says the current market volatility caused by uncertainty over Russian fuel will see the new energy price cap reach £3,359 between October and December and £3,616 between January and March 2023.
Dr Craig Lowrey of Cornwall Insight said: “Although the government promised something for power generation in October, our cap forecasts have risen to over £500 since the investment was proposed, and the fact is that the £400 promised will only cover the surface of this project’s problem.
“Reviewing the provision for upcoming cap periods deserves to be one of the most sensible tasks on the to-do list for any new prime minister. As our value cap analyses show, converting VAT and policy costs will only reduce expenses, however high. wholesale values that are driving the increases.
The new guidance comes as oil giant BP’s second-quarter profit rose to a 14-year high of £6. 9 billion.
Commenting on the results, BP Chief Executive Bernard Looney said: “Our people continued to work intensively during the quarter to help solve the energy trilemma: secure, affordable and low-carbon energy. “
The main points on how families in Britain will benefit from a £400 reduction in their energy costs under the energy bill scheme have been set out through the government.
For consumers paying by direct debit, a £66 reduction will be implemented on their bills in October and November. From December to March 2023, this amount will increase to £67.
The abatement will be implemented on a monthly basis, regardless of whether consumers pay their energy expenses monthly or quarterly, or if they have a related payment card. This is to ensure that anyone who moves this time fully benefits from the £400 reduction.
Starting in October, prepaid metered families will get bonuses in the first week of each month via SMS, email or post, the main points of contact registered with the energy supplier. However, those consumers will want to get the reduction at their same old charging point, such as a PayPoint or a Correos branch.
The reduction applies to all UK families with a household electricity meter, adding to students and other tenants whose energy costs are already included in their rental prices. In those cases, homeowners will have to pass on the relief appropriately, in accordance with established regulations. through the power regulator, Ofgem.
According to the government, only 1% of families will not get advantages from the energy bill program, either because they do not have an electric meter at home or because they do not have a direct appointment with an energy provider, such as the citizens of the park. houses.
He said those other people will receive monetary help for their energy expenses, the main points of which will be announced in the fall.
Business and Energy Secretary Kwasi Kwarteng said: “While no government can control global fuel prices, we have a duty to interfere where we can and this significant £400 energy cost relief we are offering will go some way to helping millions of people. families in the colder months.
The government is under pressure to ensure that, in any case, no family is asked for their bank details.
Respected energy market analysts, Cornwall Insight, expect the energy price cap, which currently stands at £1,971, to rise by almost 80% in October to around £3,500 a year for a typical household. The new tier will be announced on August 26.
Wholesale costs – which are the point of the ceiling – have risen especially in recent days due to the relief in Russia’s supply to the European Union.
There are fears that the cap could reach £4,000 by January 2023, stretching household budgets well beyond the limit of millions. Commentators are calling for more government intervention so taxpayers can cope with emerging costs.
MEPs are urging the regulator, Ofgem, to extend the so-called social tariff to provide electricity to other people on lower incomes.
Rishi Sunak has pledged to scrap the 5% VAT on household energy expenses as part of his campaign for the new Conservative Party leader and prime minister on September 5.
The former chancellor said that if the new value cap on energy expenditures, to be announced through regulator Ofgem on August 26 and implemented on October 1 this year, exceeds £3,000, it will remove VAT on energy for the next 12 months, saving energy. . average family around £160.
Sunak had in the past opposed calls to remove VAT from energy bills, but his supporters deny he is making a U-turn, as the replacement would be temporary.
The most recent estimates from energy analysts, Cornwall Insights, expect the new cap to be £3,244, up from the current £1,971.
The energy value limit refers to the maximum amount that energy providers can charge according to the kWh of fuel and electric power (or the “unit rate”) per year, and also includes a maximum daily “standing rate,” which is the charge of carrying the value of the power. Electric power to your home.
The proposed VAT cut would be in addition to the £400 extraordinary payment for electricity costs that Rishi Sunak, as chancellor, announced in May as part of the energy bill plan.
The £400 will be automatically added to the balance of the household electricity account in the six months starting in October. If you use a prepaid meter, £400 will be added to your meter balance or paid as vouchers.
A set of other measures has also been announced for people who receive a means test (see articles below).
Rishi Sunak’s promise on VAT – the first tax cut he unveiled in his campaign for the Conservative Party leader – would be part of his “Winter Plan” which he says will tackle inflation and the overall cost of living.
Earlier this week, MPs on the Business, Energy, Industry and Science Committee sharply criticised Ofgem’s functionality in recent years, denouncing the collapse of the energy supplier market (30 corporations have gone bankrupt in the last 18 months and there are no price lists available). . below the price cap) could have been mitigated by tighter regulation.
MPs said: “Ofgem has proven to be incompetent as a regulator of the retail energy market over the past decade. This allowed suppliers to enter the market without ensuring that they had sufficient capital, appropriate business plans, and were guided by Americans with the applicable expertise.
“The regulator has allowed poorly capitalized providers to rely excessively on visitor credit balances and operate with insufficient coverage, leaving the market ill-equipped to absorb wholesale price increases. Existing regulations were not enforced and Ofgem failed to understand the business models of the suppliers it is guilty of overseeing.
“The government has prioritised the festival over effective market regulation and overlooked Ofgem’s lack of oversight in this important market. “
Ofgem responded by saying that it is running to reform the entire market.
Anticipating the effect of an upper price cap, MEPs recommended the advent of a “social tariff”, intentionally set at a price below cost, to help those who need it most.
They said: “The government deserves to introduce a social tariff for the most vulnerable consumers and a relative tariff for the rest of the market.
“The effect of the energy crisis on households is persistent and severe, especially in the context of the cost-of-living crisis, and is likely to lead to an unacceptable increase in poverty and energy difficulties this winter. Even if we welcome the government’s May 2022 relief plan, it will no longer be enough to respond to the revaluations expected in October.
“The government should promptly update its programme targeting low-income, fuel-hungry and vulnerable consumers, and expand a programme to vulnerable consumers to accelerate the repayment of energy debt resulting from this crisis.
Energy market regulator Ofgem has published its investigation into how suppliers adjusted customers’ direct debit bills earlier this year. Many families experienced steep increases, with 500,000 bills expanding more than 100%, writes Candiece Cyrus.
He found that:
Of the 17 major suppliers in the market, 4 (Ecotricity, Good Energy, Green Energy UK, and Utilita Energy) had moderate to severe weaknesses in their processes and controls.
Ofgem is collaborating with those companies to make “rapid and physically powerful improvements” to processes and a re-evaluation of customer direct debits where necessary. If those providers don’t improve fast enough, Ofgem says it will take enforcement action.
Two companies, TruEnergy and the UK Energy Incubator Hub (UKEIH), had serious weaknesses. UKEIH has since ceased operations and its consumers were absorbed through Octopus on July 9. Coercive measures against TruEnergy are being considered.
Bulb, E. ON, Octopus Energy, Outfox the Market, Ovo, Shell, and Utility Warehouse were found to have weaknesses or loopholes in their processes that can lead to poor outcomes for consumers. Ofgem has a commitment to compliance with those suppliers.
No major issues were discovered at British Gas, EDF, ScottishPower and SO Energy, Ofgem says it will work with those suppliers to achieve continuous improvements. Businesses will be asked to review direct debits from customers to make sure they are correct, offering further assurance. for consumers.
The affected companies will have to submit their plans within two weeks for approval by Ofgem.
Ofgem can force corporations to take action on their operations, fine them and ban them from accepting new consumers if necessary amendments have not been made.
Where appropriate, Ofgem expects suppliers to correct any calculation errors, adding the issuance of refunds where necessary and if a goodwill payment is warranted.
Households are facing even greater financial strain following analyst Cornwall Insight’s change in forecast that Ofgem’s energy value cap will rise to £3,244 in October, from £1,971 recently and especially more than the £2,980 hinted at last month.
The company says the cap, which limits the amount of energy companies can qualify for power pools and rolling tariffs, will rise to £3,363 in January 2023. He previously predicted that the cap would be £3,003 at the moment.
The cap is reviewed every six months and has increased from £1,277 to its current level in April. After the October increase, it will be reviewed every three months to allow for greater responsiveness to changes in wholesale energy prices.
The figures used correspond to the annual energy tariff of a typical family with a popular variable tariff and paid by direct debit. The cap does not impose a limit on the number of bills, as prices are determined based on usage.
If Cornwall Insight’s estimates prove accurate, expenses will increase by more than 160% between March 2022 and January 2023 due to emerging wholesale prices (see articles below).
The government has announced a package of measures to help others cope with the cost-of-living crisis, adding money to other people with means-tested benefits and a £400 cut in electricity costs for each and every family in the autumn. .
It remains to be seen how the recent political turmoil, coupled with Boris Johnson’s resignation as leader of the Conservative Party and the upcoming leadership election, will drive long-term plans to tackle peak levels of inflation in all sectors of the economy.
The government has included measures to fight emerging energy costs, continue the deployment of smart energy meters and hedging against cyber threats in smart devices, in its energy security bill, which was presented to Parliament yesterday.
The ambition is to generate £100 billion of private sector investment in the energy sector by 2030, promoting hydrogen, offshore wind and heat pumps as new energy supply resources.
Given the turmoil in the government following mass resignations in the run-up to Boris Johnson’s resignation as leader of the Conservative Party, the bill’s passage in Parliament could be delayed.
The bill envisions the energy price cap to remain in place beyond its original 2023 expiration date, with the goal of keeping energy prices low for 11 million families with prepaid/prepaid variable price lists and 4 million families with prepaid meters.
The cap limits the amount energy providers can rate families according to the unit of fuel and electricity, as well as a constant rate, while reflecting fluctuations in wholesale energy prices.
The last update to the cap came in April, when it went up 54% to £1,971 per year for households with average energy use. For families with prepaid meter tariffs, it increased to £2,017 per year. it is the result of an increase consistent with wholesale costs due to growing foreign demand and pressure on materials due to the war in Ukraine.
Energy research firm Cornwall Insight predicts the cap will reach £3,244 in October and £3,363 in January next year.
Dame Clare Moriarty, of the customer advice charity Citizens Advice, supports the extension of the price cap, but said more action is needed in the short term to enable families to cope with energy costs: “With millions of people already struggling to make ends meet, it’s a relief to see the government extend this extension. Value limits beyond 2023.
“However, much of what we pay for our energy goes straight out the window, because many of our homes are drafty and poorly insulated.
“We are pleased that the government is taking a long-term view for other people to pay their electricity bills, but wants to urgently introduce energy power measures so that families can stay warm this winter.
The new bill also measures the continued rollout of smart meters for families and small businesses across Britain until the end of 2025. It aims to review vendors’ installation targets for the last two years of implementation in 2023, and revise all wise meter counting formula after 2025.
Smart meters demonstrate how much energy is used, as well as how much it costs, in real-time, allowing consumers to see where they can consume energy and save money.
Smart meters would also allow consumers to visualise how much energy they can save using time-of-use price lists, which could be introduced in the UK in the coming months. These price lists inspire families to use energy during off-peak hours; for example, rating an electric car battery for lower cost advantages and extended calls 24 hours a day.
The bill will also prevent “cyber hacking” of smart devices, such as electric vehicle charging stations and smart heat pumps, by giving the government more powers to introduce minimum technical requirements for data security and privacy.
The government will also have power over the companies that control those devices remotely.
Kwasi Kwarteng, Business and Energy Secretary, said: “To make sure we are no longer held hostage by rogue states and volatile markets, we want to push forward plans to build a truly clean, affordable and evolved energy formula in Britain.
“This is the biggest reform of our energy formula in a decade. We will cut red tape, attract investment to the UK and capture as much of the global market share as can be imagined in new technologies to make this a reality.
Dhara Vyas, from industry agreement Energy UK, said: “As the cost of energy reaches unprecedented levels, it is right that the government urgently legislates to protect consumers, while also putting in place frameworks and regulations for the decarbonisation of the UK economy, so that it reduces expenditure in the electricity sector in the long term. “
Energy consumers will pay around £2. 7 billion to cover the burden of shifting 2. 4 million consumers to new suppliers following the closure of 28 electricity corporations since June 2021, according to the National Audit Office (NAO), the independent parliamentary body that monitors public spending.
The NAO criticised the role played by Ofgem in regulating the electricity market, which is responsible for managing the consequences of a fall into a wall.
The estimated charge of £94 per family will be distributed to all energy customers, not just those whose businesses have gone bankrupt.
According to the NAO, Ofgem’s strategy for licensing and tracking suppliers in recent years has increased the risk of companies going bankrupt, although the NAO said sharp increases in wholesale energy costs were the main cause.
Gareth Davies, Director of the NAO, said: “Ofgem and the Department for Business, Energy and Industrial Strategy (BEIS) have ensured that the vast majority of consumers do not experience any disruption to their power source in the event of a supplier outage. .
“However, by allowing so many financially fragile suppliers to enter the market and imagining that there could be a long era of volatility in energy prices, Ofgem has enabled the progress of a market vulnerable to large-scale shocks.
“Consumers have been hit the hardest by supplier defaults at a time when many families are already in a complicated monetary scenario after seeing their spending reach record levels. We want to expand a supplier marketplace that works for consumers.
The NOA said that until 2018, Ofgem had not analysed the monetary situation of power corporations when they applied for a licence or after entering the market. Although it began tightening regulations in 2018, NOA said Ofgem failed to address the dangers with existing suppliers. until 2021.
NAO said Ofgem “set a set of targets for the regulation of its retail market around price, stability and innovation, against which it reviews and reports on its functionality at least once a year. “
An Ofgem spokesperson said: “Ofgem accepts the conclusions of the NAO report, which are in line with our own findings and the recommendations of the independent Oxera report we commissioned, and we are already working hard to address all the issues raised.
“While the global impact on the value of energy, unprecedented in a generation, would have led to market exits in any regulatory framework, we have already made it clear that Ofgem’s suppliers and monetary resilience scheme are not strong enough. This has contributed to a significant number since August 2021.
“We welcome the popularity of the NAO for the fact that Ofgem began tightening regulations in 2018 and continued to do so until 2022. Our announcement this week continues that procedure with the hedging of visitors’ credit balances and strict new measures for the monetary adequacy of power. suppliers (see story below).
“While no regulator can, or should, ensure that companies do not go bankrupt in the future, we will continue to adopt a whole-market strategy to expand the regulatory regime, ensuring a fair and physically powerful market for consumers, which helps maintain fair prices as we move forward. Moving away from fossil fuels and towards affordable, green, locally produced energy.
NOA states that the estimated cost of £94 per family to cover control of the visitor reallocation process may rise or fall, as the cost of taking businesses out of the market is uncertain.
Possibly an additional charge would also be added to manage the Bulb Energy company. As the largest supplier with 1. 6 million customers, Bulb Energy came under special management last year. The government spent £900 million to hire a director to run the business in 2021. 2022 and budgeted an additional £1 billion to run it in 2022-2023.
Ofgem, the energy market regulator, is introducing currency controls to reduce the threat of supplier bankruptcy. And if companies go bankrupt in the future, they will have to protect consumers from the administrative fallout.
Since September 2021, 28 energy suppliers have gone bankrupt, leaving all families with the percentage of the bill for the reassignment of their consumers to new suppliers and the coverage of potential credit balances with the deceased supplier.
This added £94 to the home’s annual energy costs.
Ofgem offers:
Jonathan Brearley, chief executive of Ofgem, said: “The energy market remains incredibly volatile and a number of primary geopolitical issues continue to exert great pressure. Ofgem is working to make sure that the suppliers of their positions can weather the ongoing storm.
“By ensuring suppliers have well-funded, sustainable and more resilient business models, we can avoid the supplier bankruptcies we saw last year, which caused a lot of stress and worry and added prices to everyone’s bills.
“But if some fail again, customers’ credit balances and renewable energy taxes/bills will be protected. “
Consumer teams have long criticized the formula corporations use to tap into credits from their customers’ accounts to fund their operations: M. Brearley said those balances “are used through some vendors as an interest-free business credit card. “
The concept of the reform is that suppliers will be required to have sufficient current capital to operate without jeopardizing their customers’ credit balances. Ofgem has been criticized in the past for allowing dozens of corporations to enter the market over the past decade without a review of their monetary strength.
Ofgem says it needs to build long-term resilience by fostering sustainable business models and putting an end to risky behaviours. It has developed stricter access requirements for new suppliers and presented new evidence to demonstrate that other people who create and run electric corporations are compliant and fit to do so.
The government has announced that the first of two cost-of-living cash assistance payments, totalling £650, will be paid from 14 July to 8 million UK families with means-tested benefits.
The first payment of £326 will be made into recipients’ bank accounts until the end of July.
To be eligible for the first payment, applicants had to obtain one of the following benefits, or have initiated a claim that was successful, as of May 25, 2022:
This payment will be tax-free, will not count toward the maximum benefit limit, and will not affect existing benefits. The second payment of £324 will be held in the autumn at a date to be determined, with main eligibility points provided in due course.
The £650 payment to low-income families was announced in May through Chancellor Rishi Sunak MP, along with a range of other monetary measures. See the article below.
MAY 27 UPDATE: Ofgem, the energy regulator, warns people not to fall for scams where criminals claim it is mandatory to sign up to receive the bills or bill reduction that are indexed below, before asking recipients to provide their bank’s main points or click through to fake websites. Ofgem has not issued any such notices or requests, so any email, text message or other communication should be ignored and reported to Action Fraud in England, Wales and Northern Ireland or the police in Scotland.
Chancellor of the Exchequer Rishi Sunak MP has outlined a £15 billion package to help households cope with the expected sharp rise in energy costs later this year.
All families will see their expenses reduced by £400 in the autumn, with no need to reimburse them, while those receiving resources-based benefits, pensioners and those receiving disability benefits will receive lump sum bills directly into their bank accounts. be mandatory to apply.
The value cap on energy bills, controlled by market regulator Ofgem, is set at around £2,800 a year for average households on October 1, from £1,971. The current figure for families with a prepaid meter is £2,017 per year.
Ofgem frontman Jonathan Brearley showed off the £2,800 last week (see article below).
The chancellor also announced a tax on the energy profits of oil and fuel producing companies, which have recorded skyrocketing profits due to high wholesale costs; This is expected to generate £5 billion.
The government also has the option of extending this “exceptional” tax to the electricity production sector.
The measures announced include:
In addition, Sunak said the £200 subsidy on the energy bill in February and to be deducted from all household electricity expenses in October will be doubled to £400.
Above all, he said he would like to be reimbursed. Originally, the scheme provided for a £40 per year deduction from expenses for five years to recoup the original £200 grant.
As part of his speech to Parliament on the question of life, the chancellor announced that benefits payable in the UK from April 2023, added to the state pension, would be stacked on top of customer rates measured in September.
This restores the “triple lock,” which provides for the largest of the three cumulative measures during the fiscal year: customer value inflation, average wage growth, or 2. 5%.
The government opted for the triple lock for the 2022/23 financial year as a reaction to the pandemic, but the chancellor announced it would be reinstated in September for the 2023 increases.
The recent CPI peak for April this year, calculated through the Office for National Statistics, is 9%.
The Bank of England and other monetary commentators have warned that inflation could remain stubbornly high through the end of 2022 and potentially beyond.
If this is the case, the recalculation of benefits will result in a significant increase in the state pension, valued at several hundred pounds per year for the 2023/24 tax year. The UK’s total state pension currently stands at £185. 15.
In her speech today, the Chancellor announced a transitional tax on energy profits as a component of the government’s cost of living programme.
Oil and fuel corporations will face an additional 25% tax on their profits, raising their effective rate from 40% to 65%. This is a transitional measure that will be phased out when oil and fuel costs “return to traditionally more general levels. “
Sunak said a “sunset clause” will be enshrined in the legislation, in the hope that the transience that is building up in tax rates will be avoided by the end of 2025.
He also announced a new allocation of investments to cushion the blow to oil and fuel companies. Companies will now get a 90% tax break for every pound invested, almost double the previous level. Mr Sunak said that “businesses will benefit from a vital new incentive to reinvest their profits”.
Sunak referred to the “extraordinary” profits obtained also in the power generation sector and in the face of pressure that France, Italy, Spain and Greece have already taken measures in the face of this situation.
The government is considering whether production companies will also be subject to a tax on profits.
Sunak estimated that the tax on the energy profits of oil and fuel manufacturers will raise £5 billion over the next year to help fund the £15 billion measures announced today.
The average household energy expenditure could exceed £800 a year this autumn when the new energy value limit comes into force.
Jonathan Brearley, chief executive of energy regulator Ofgem, told MPs on the all-party parliamentary committee on business, energy and commercial strategy that he expects the maximum value of energy to reach “around £2,800” when it is recalculated later this summer.
The cap, implemented in April, amounts to £1,971.
Such a move would end the current cost-of-living crisis in the UK, which is already being felt in millions of households.
Brearley attributed the increase to continued volatility in the fuel market. This situation was exacerbated by Russia’s invasion of Ukraine, its impact on materials, and the consequent repercussions on fuel prices.
Volatile energy tariffs have already led to the bankruptcy of 30 UK electricity companies since the beginning of 2021. These collapses can also increase customer fees due to the need to redirect customers from bankrupt companies to other providers.
The rate cap, which limits the amount electric corporations can qualify per unit of fuel and electric power provided to domestic customers, as well as any constant costs, increased by as much as 54% on April 1 of this year.
This spring’s increase means that the bill for a household with average consumption, who benefit from a variable dual-energy tariff and pay by direct debit, has risen from the previous value limit of £1,277 to just under £1,971.
Consumers of prepaid meters also saw an increase in price, from £1,309 to £2,017, also in normal use.
The cap, which is lately calculated twice a year, although Ofgem is pushing for it to be reviewed quarterly from autumn (see articles below), applies to around 22 million families in England, Scotland and Wales. Northern Ireland has no cap value.
Brearley told MPs that rising energy costs are “a once-in-a-generation event, not noticed since the oil crisis of the 1970s. “
He also warned that the number of other people in energy poverty (explained as when a family has to spend more than 10% of their disposable income source on heating their home) could simply double.
Under the existing calculation system, the maximum value will be recalculated next August before being implemented on October 1. Brearley estimates that by the fall, 12 million homes could be in energy poverty.
Brearley told MPs: “We are dealing between two versions of events. A scenario in which costs would return to their previous level, for example in the case of peace in Ukraine, but a scenario in which costs could rise further if we were to see, for example, a disruptive disruption of the supply of fuel materials from Russia. “
The Ofgem chief also apologised for regulatory shortcomings and admitted that if financial controls had been put in place for suppliers in advance, fewer companies would have gone bankrupt over the past year due to their lack of preparedness for the sharp rise in wholesale energy prices.
The estimated increase in the value limit is expected to prompt the government to take further action to avoid the impact on families facing rising energy costs. One solution suggested by activists and opposition components is a state tax on power companies that made state profits in the first part of this year.
Energy studies specialist Cornwall Insight provided a study of the most likely effect on energy costs of moving to a quarterly price cap review, compared to the six-month existing price cap review (see story below).
Dr Craig Lowrey, senior consultant at Cornwall Insight, said: “The devil will be in the details. With greater complexity comes a greater threat of unintended consequences. It would have been useful to see a more detailed assessment of the value capitalization levels for the new global to the previous one from the client’s perspective.
Cornwall Insight predicts that average annual energy expenditures would reach £2,750 this winter under the existing value cap system. As part of a quarterly review of the value limit, it predicts expenses would reach £2,600.
While this represents a significant increase from the existing value limit of £1,971 per annum for a family with average consumption, it would mean a 5% relief for the half-yearly review per year.
Ofgem, the energy market regulator, is conducting a formal consultation on its proposal for a quarterly review of the price cap. He supports this decision because, he argues, it would be up to energy suppliers to easily adjust their energy prices based on changes in wholesale tariffs.
Any adjustments would take effect from October 2022, when the existing value limit is expected to be replaced (the new point will be announced in August).
Britain’s energy regulator, Ofgem, is seeking reforms that would allow its energy value limit to be adjusted quarterly instead of twice a year.
The cap was introduced in 2019 to protect consumers from unfair costs, restricting what energy providers can charge. It was recently updated based on wholesale energy prices in April and October.
As part of the proposed reforms, the cap would be updated every three months in January, April, July and October.
The cap, which limits the amount consumers can be charged per unit of energy used and related ongoing rates for fuel and electricity, does not set a limit on bills. The more energy you use, the higher your bill.
Currently, the limit is £1,971 for an average family on a variable dual energy tariff (gas and electricity), paid by direct debit. It is feared that this figure could rise to £2,600, or even £3,000 in October.
Last week, the government announced in the Queen’s Speech that the cap, introduced as a transitional measure in 2019, would be extended beyond 2023 taking into account the market (see article below).
Jonathan Brearley, chief executive of Ofgem, said moving to quarterly reviews of the cap could simply reduce costs: “Our reforms will make consumers pay fair value for their energy while ensuring the resilience of the entire sector.
“Today’s proposed update would mean that the price cap would better reflect existing market values, and any price discounts would be passed on to consumers more quickly. “
Ofgem believes that adjusting the price cap quarter will help energy suppliers continue to succeed as wholesale prices rise and fall rapidly, reducing the risk of business bankruptcy.
Price volatility has led to the bankruptcy of around thirty British electricity companies since the beginning of 2021. These collapses can increase customer fees due to the burden of diverting customers away from bankrupt companies to other providers.
Brearley added, “The past year has shown that we want to make adjustments to the value limit so that providers are better at managing risk in those unprecedented market conditions. “
In the midst of a cost-of-living crisis, reducing energy spending could simply ease the pressure on British household budgets. However, if the wholesale value of energy continued to skyrocket, the bill would be passed on to consumers much faster if a quarterly survey were conducted. Replacement of the cap put in place.
Ofgem will publish a consultation on price cap plans, which will remain open until Tuesday 14 June 2022. If these reforms come into force, they will be implemented from October 2022.
The Queen’s speech, delivered today by Prince Charles to define the government’s legislative timetable for the upcoming parliamentary consultation, included the main points of a draft law on energy securities. The aim is to protect consumers from sharp increases in value by extending the official energy value limit. beyond 2023.
The bill will also encourage the country to switch to renewable energy sources and inspire families to install heat pumps as an alternative to classic heating methods that rely on fossil fuels.
However, critics have advised the government to take more urgent action to ease the cost-of-living crisis in general and rising energy expenses in particular. The government responded by saying there was no short-term solution.
There are fears that the next version of the value cap, which will be announced by regulator Ofgem in August and implemented in October, could reach £3,000 per year up to its current point of £1,971 for average families (see stories below). .
The price cap is a transitory measure introduced in 2019 to prevent energy suppliers from making massive profits. The turbulence in the market since the increase in wholesale prices in early 2021 has necessitated its extension to protect consumers from full costs, hence today’s announcement. .
Currently, the limit is adjusted twice a year, in April and October, but Ofgem allows it to be adjusted further if market situations require it.
The UK is proposing to expand its Warm Home Discount programme in Scotland, adding around 50,000 more families to the 230,000 already receiving payments.
The payment of £140 for electricity costs in winter would also increase to £150, and more suppliers would be encouraged to participate. The plan would also run from 2025 to 2026.
The aim is to align the Scottish plan with the plans of England and Wales.
The government said: “The warm home discount in Scotland will continue to focus on means-tested benefits such as universal credit and pension credits, ensuring that cuts are passed on to those on lower incomes.
“Energy suppliers would possibly use additional eligibility criteria, provided that the criteria identify families at risk of energy poverty, subject to approval through (energy regulator) Ofgem. “
You can learn more about the Warm Home Discount program here, adding eligibility criteria.
In an interview with the BBC, Keith Anderson, director of Scottish Power, reiterated his call for vulnerable families to take advantage of £1,000 relief on their energy costs in the autumn, with the charge to be covered by a £40 increase in the annual charge. . expenditures of other energy consumers for five years, starting in 2023.
Anderson first made this proposal when he asked a question in Parliament last month (see story below). It is estimated that up to 10 million families are at risk of energy poverty when the next Ofgem value limit adjustment is made in October.
He is concerned that the cap is too low, as Ofgem will use existing low fuel costs in its calculations, while many suppliers have already recently paid high costs for their long-term supplies.
If the cap prevents providers from recouping what they’ve already spent, Anderson said we could see more business bankruptcies, most of the 30 seen in the past 18 months.
This would result in significant additional prices in the system, which would have to be added to visitors’ invoices.
Experts recommend that October’s value limit could be between £2500 and £3000 for average users, a significant increase from its current point of £1971.
Kwasi Kwarteng MP, Secretary for Business and Energy, today demonstrated that energy market regulator Ofgem is tracking suppliers’ behaviour in relation to excessive increases in direct customer debits, with really heavy fines most likely if companies continue to default.
In a tweet this afternoon, Kwarteng supported what many consumers have said in recent weeks, namely that suppliers have demanded normal invoices at a point above what could be justified simply by Ofgem’s value limit increase on April 1.
The cap has risen to 54%, adding almost £700 to typical annual energy expenses for those paying a dual fuel variable rate fee via direct debit. The existing average value of £1,971 is expected to increase in October, when the next Maximum Cap revision is implemented, due to high wholesale values.
Kwarteng tweeted: “Some energy providers have higher direct debits than required.
“I can verify that Ofgem has compliance reviews today. Providers have 3 weeks to respond.
“The regulator will not hesitate to achieve rapid compliance, in addition to the imposition of really large fines. “
Ofgem first raised the malpractice factor in April when its boss, Jonathan Brearley, said: “We’re seeing worrying symptoms that some corporations are responding to those (market pricing) adjustments by allowing visitor service levels to deteriorate.
“Concerns have been raised that some providers may have higher direct debit bills than necessary, or guide consumers toward rates that may not be in their most productive interest.
“When families are faced with large increases in their energy bills, suppliers are held accountable and bad practices are temporarily corrected. “
Compliance reviews will come with stricter oversight of how pre-authorized invoices are processed and how much businesses retain in visitor credit balances.
Brearley said: “These paints will allow Ofgem to assess whether companies are complying with the conditions of their licence and working with them to address shortcomings. If they don’t, we won’t hesitate to take swift action for compliance, adding enforcement measures to really hefty fines. “
Ofgem is also tackling the practice of corporations employing their customers’ cash in their businesses rather than buying energy. He says this is one of the fundamental reasons for the problems of many suppliers who have left the market.
Mr. Brearley said, “Customer credit balances deserve to be used solely to reconcile invoices, not as a risk-free source of capital. That’s why we’re exploring the option of recording credit balances and bills similar to those for renewable energy so that they are in place in the event of a supplier default. “
Around thirty companies have gone bankrupt since the beginning of 2021.
The CEOs of some of the UK’s largest electricity corporations are calling on the government to provide urgent, concrete money to consumers facing massive increases in their bills.
Speaking at a meeting of Parliament’s Select Committee on Business, Energy and Industrial Strategy, Keith Anderson, director of Scottish Power, told MPs that the current affordability crisis “has a length and scale that goes beyond what the industry can handle”.
Energy prices rose 54% on April 1 as the market price cap, set by regulator Ofgem, was raised to take into account emerging wholesale prices in recent months. Average annual costs are now around £2,000.
The cap is expected to increase further on Oct. 1 due to the effect of the war in Ukraine on energy supplies. Anderson said the effect of the October limit update would be “horrific. “
One proposal for government intervention is the creation of a “deficit fund”, which would remove £1,000 from the annual expenses of consumers considered to be in energy poverty or with a prepaid meter. This fund would then be repaid over 10 years through all energy consumers.
Anderson said this short-term measure will lead to the creation of a reduced social tariff, targeting other people in energy poverty and those benefiting from an early payment agreement.
Michael Lewis, director of Eon, said the government could also remove VAT from energy expenditures (it is charged at 5%) and transfer environmental taxes from expenditures to the general tax burden. Taken together, these measures can average annual expenditure at £250. at £300.
Other measures may come with simply extending the Warm Home Discount, valued at £150 a year next winter, to more people, and extending the energy rebate to £200 to be paid through the government to all household electricity bills in the UK in the autumn.
Lewis also called for requiring the deployment of smart power meters to help power across the market.
Chris O’Shea, director of Centrica, which owns British Gas, said regulation of the sector needs to be reviewed to avoid long-term corporate bankruptcies. Around thirty electricity corporations have gone bankrupt in the last 12 months, with the resulting administrative prices adding £68 to the constant prices paid through each energy customer.
O’Shea told the party-wide committee of MPs that he fears more business bankruptcies next winter, with the grim fact that they will eclipse what has happened before.
The assembled heads of power expressed in last week’s announcement through regulator Ofgem that they would implement stricter controls to prevent corporations from using their clients’ budgets in their businesses.
They also subsidized measures to prevent electric corporations from disproportionately expanding direct debits from visitors and to prohibit them from switching their consumers to constant price lists that charge more than the popular variable-rate price lists.
Ofgem has threatened to impose really heavy fines on companies that comply with its rules.
The cross-party Economic, Energy and Industrial Strategy Committee will grill representatives of four major utilities on how they are supporting their consumers following a 54% increase in average spending on April 1.
The CEOs of Centrica (which owns British Gas), E. ON, EDF and ScottishPower will meet MEPs this morning at 10. 30am.
MPs are expected to focus on suppliers that have higher direct debits beyond a point compatible with the new energy value limit of £1,971 a year for average consumption.
It has also been reported that consumers have been forced to opt for expensive fixed-rate offers instead of variable, cap-controlled rates.
MEPs will also ask employers about how they will implement the government’s electricity safety strategy (see article below). Other issues on the calendar include the coming into force of the £200 electricity bill relief scheme in the autumn, which will long term the value cap and whether the market will remain competitive.
Also expected to appear before the committee are the heads of bankrupt suppliers Bulb and Avro, who will come under intense scrutiny for control of their corporations before their bankruptcy last year.
A significant portion of this month’s price cap increase is attributed to the task of reallocating consumers from the 29 businesses that have ceased operations since the energy crisis began to be felt last summer with a sharp rise in wholesale prices.
The Committee says the bankruptcy of Avro, which closed due to a £90 million debt to its customers, is expected to leave consumers with £700 million.
Bulb was well nationalised (placed under a special regime supervised through the regulator, Ofgem and the government) after being deemed too big to fail. The government is looking to find a customer to take over amid reports that its life device could be successful. by £3 billion.
The government has published its UK Energy Security Strategy, which focuses on moving to low-carbon generation and strengthening the UK’s energy self-sufficiency over the next 10 to 15 years. But the initiative does little to address urgent considerations about energy affordability amid the ongoing cost-of-living crisis.
The government says, “Consumer expenditures will be lower in this decade than they otherwise would be as a result of this government’s actions. “
Opposition MPs and customer rights advocates have called on the government to provide an emergency budget to deal with the family’s currency crisis. Critics of the general strategic technique have also argued that more emphasis should be placed on achieving better energy efficiency, for example by extending subsidies to the UK’s building stock insulation.
The new energy strategy indicates that the government will increase domestic oil and gas production in the short term, but this activity is unlikely to reduce the likelihood of a further increase in the national energy price cap in October.
The cap, adjusted twice a year, reflects the progression of wholesale energy costs. The October cap will take into account costs in the six months to the end of July, which are inflated by fears about sources, in part because of the conflict in Ukraine. .
The government’s ambition to decarbonise energy production will see the acceleration of the deployment of wind power, new nuclear power, sun and hydrogen. He says this may mean that 95% of electric power by 2030 will be low-carbon; there is a legal requirement for the UK. to achieve net-zero carbon emissions by 2050.
Some critics have warned that energy expenses (many of which rose by as much as 54% on April 1 following the price cap increase) could be reduced by £100 in the short term thanks to the removal of ‘green taxes’, which fund the environment. Friendly power initiatives.
The government’s strategy states that nuclear generation – which it calls a safe, empty and reliable source of energy – will account for up to about 25% of the UK’s projected electricity demand.
A new government body, Great British Nuclear, is being set up to deliver new projects “as soon as imaginable in this decade”, including the Wylfa site on Anglesey. The strategy document states that up to 8 new reactors could be built.
Other plans include:
Ofgem, the energy market regulator, is “working with suppliers” following several reports of consumers being unable to submit meter readings before their value limit was raised to 54%, effective April 1.
Customers are looking to file updated returns ahead of the value increase, which affects those on variable rate rates, so they can ensure they will pay today’s lowest rate for the energy they will use in March.
The concern is that if they rely on their supplier’s estimate of how much energy they used, some of their March usage could be billed at April’s top rate.
The cap on prepaid meter spending will also increase tomorrow, but since consumers here take advantage of pay-as-you-go terms, there’s no need to sign up for a meter reading.
In a series of tweets this afternoon, Ofgem said: “We are aware that some energy providers are now experiencing issues with their websites, which are preventing other people from recording meter readings or their online accounts. We are discussing this factor with suppliers.
“Consumers experiencing disruption touch their provider without delay and take a photo of their meter reading if a high volume of taps prevents them from getting through.
“Providers will have to take all moderate measures to allow consumers to access their account information, aggregating meter readings. “
Several replies to tweets pointed out that consumers can’t contact their providers precisely because phone lines are overwhelmed by the number of other people seeking to contact them.
Anyone who wants to contact their provider should take a picture of their meters (gas and electric) and email it to their own account to have a usage history from Array.
This may be submitted later or made available in the event of a subsequent dispute.
Those with smart meters will send their readings to their provider, but of course they can take and take a photo if they wish.
Those with consistent energy price lists won’t see any replacement in their spending as their offers fall outside the scope of the price cap.
In another thread of tweets, Emma Pinchbeck, from the Energy UK supplier industry framework, said internet sites were down due to the scale of visitor enquiries: “People are very concerned and of course they have realised that customer teams are saying that today is the deadline to submit readings.
“We are only consulting with members, but please be aware: a) some providers will not apply new costs b) the maximum will take meter readings after today and will have other measures in a position to submit. Don’t panic, check the meter, keep reading – many providers have data on their twitter.
“Meanwhile, outages and call centers for industry teams and customers reflect the breadth of concern. This shows just how scary those price increases are and what the industry has told the government: Higher fuel prices aren’t just a challenge for vulnerable customers, and more desires to be made.
Yü Energy Retail Limited, a company with 20,000 locations in the UK, takes over consumers from Whoop Energy and Xcel Power Limited, which ceased operations last week (see article below).
As happens when suppliers go bankrupt, the market regulator Ofgem called for tenders and named Yü Energy as the candidate for consumers of bankrupt companies.
Yü Energy is primarily known as a professional energy supplier, however, it has posted a reassuring message on its website to Whoop’s 50 national customers: “Ofgem believes we are the most productive people for the job. We have proven that we are capable of taking care of its source and we are committed to incorporating it. Yü Energy is a solid company with a long-term strategy and the ability to meet the demanding existing situations of the energy sector.
Domestic consumers will move to a tariff through Ofgem’s price cap (see stories below). Corporate energy price lists are not governed by price caps. Commercial consumers will benefit from a constant tariff, the values of which will be announced in the coming days.
Anyone who needs to switch providers can shop around, but it’s a good idea to wait until the move is complete. Customers will not be charged an exit payment if they switch to another provider. For more information, scale agents can make a stopover at www. . yuenergy. co. uk.
At this time, domestic fares will not apply under the existing maximum price, which is in effect until March 31. On April 1, it will increase to 54% to account for rising wholesale prices.
The limit for a family with an average consumption of a dual variable energy tariff, paid by direct debit, will increase to £693, from £1,277 to just under £1,971. Consumers of prepaid meters will see an increase of £708. from £1,309 to £2,017, again for typical use.
Actual expenses will depend on consumption, so the limit doesn’t limit how much a given customer will be charged.
The customer’s source will continue as general after the transfer to Yü Energy on February 19, 2022. They will contact them in the coming days about the changes and take a meter reading as soon as possible.
Two of the smallest in the electricity market, Whoop Energy and Xcel Power, announced the cessation of their operations.
This brings to 28 the number of companies that have closed their doors since the current energy market crisis worsened last August with a rise in wholesale prices.
Whoop Energy supplies fuel and electricity to 262 visitor accounts: 50 domestic and 212 non-national. Xcel Power has 274 non-domestic fuel visitors.
According to the backup protocol controlled through Ofgem, the electricity market regulator, visitors will continue and the budget that domestic consumers have deposited into their accounts, where they are creditors, will be protected.
Domestic consumers will also exceed the energy price cap when transferring suppliers. The price cap, currently £1277 per year for dual fuel users with average consumption, will increase to £1971 on 1 April (from £1309 to £2017). for those with prepaid meters).
The existence of this cap has protected consumers from the worst effects of energy prices in emerging countries, although the upcoming 54% increase is unprecedented and expected to plunge millions into financial distress.
For suppliers, the limit they have allows them to sell at a loss, hence the catalogue of business bankruptcies in recent months.
Customers of Whoop Energy and Xcel Power Ltd will be contacted in due course through their new supplier, who will be selected through Ofgem. In the meantime, Ofgem’s recommendation to those affected is as follows:
• Wait until a new provider has been designated and contacted within the next few weeks before switching to another energy provider. • Take a meter reading when your new provider contacts you to complete the visitor transfer process. To the selected supplier and honor the budget that domestic consumers have deposited into their accounts, when creditable, as smoothly as possible.
With the unexpected 54% increase in its expected internal value cap in just six weeks, on April 1, energy regulator Ofgem announced two measures aimed at market stability and protecting consumers from steeper increases.
He expects that some of the companies most likely to go bankrupt due to the still high price of fuel and electricity in wholesale markets.
The cost of reallocating consumers from the 26 corporations that have gone bankrupt since the crisis worsened last summer is estimated at £4 billion, which will be passed on to consumers’ bills.
The first step will be to require suppliers to provide all of their price lists to existing consumers as well as new consumers, rather than offering new consumers unrealistically reasonable offers to publicize their business.
According to Ofgem, this will “stabilise the market in the short term by acting as a brake on festivals with unsustainable prices when less expensive fares return and visitor switching resumes”.
“It will also restrict price discrimination by suppliers and support customer confidence in the retail market after the challenges of this winter, by gaining better access to cheaper price lists for customers who would likely be less willing or less able to transfer suppliers, especially those in vulnerable areas. Regions. situations. “
The second measure is the option of imposing a market stabilization fee if wholesale prices fall, especially after the new price cap comes into effect.
This would see companies gaining new customers pay commissions to those losing business, to mitigate the high effects of wholesale price volatility.
Ofgem recognises that, if this tax is applied, it will reduce “to some extent” the cheapest price lists found on the market. He adds: “However, significant savings will still be realizable for active consumers looking to switch. “
In addition, the expected relief in the number of businesses closing will increase upward pressure on bills.
Both measures are expected to be scrapped in the autumn, when Ofgem hopes to introduce further reforms to its price cap mechanism.
These come with the arrival of quarterly reviews (currently the cap is reviewed every February and August, with adjustments taking effect in April and August) and a relief in the current era when providers must give their customers two-to-one. month.
Households will get credit benefits on their energy spending by restricting their energy use at peak times this winter, as part of a new National Grid plan.
The National Power Grid Operator (ESO) is partnering with Octopus Energy to see if, between February 11 and March 31, it can better match energy demand to the source, and will offer unique “financial incentives” to participants.
Approximately 1. 4 million Octopus Energy customers with smart meters will be eligible for rewards if they reduce their energy usage below what they would normally use between any of the two-hour intervals each day during the two-month trial.
The two-hour interval on both days (00:00, 9:00-11:00 or 16:30-18:30) will be announced the day before at 16:00, giving interested parties the opportunity to signal or cancel the subscription. Those who sign up will earn up to 35p of free energy for one or both kilowatt-hours (kWh) they don’t use.
The test can reduce energy consumption by up to 150 megawatts (MW) each two-hour event, or 75 megawatt hours (MWh). As a reminder, the average British family consumes around 15,000 kilowatt hours (kWh) of fuel and electricity per year, the equivalent of 15 MW.
ESO will use the data collected in the pilot to communicate its plans to operate a zero-carbon grid for certain periods until 2025 and a fully decarbonised grid until 2035. He hopes the data will allow him to balance consumption and demand more effectively, with savings. . transmitted to households.
ESO’s Isabelle Haigh said: “Encouraging families to engage on exciting climate-friendly energy opportunities like this trial will be part of our transition to net zero.
“The flexibility of the formula is key to helping control and reduce electric power demand peaks and the safety of electric power transmission in the UK.
“This trial will provide valuable insights into how suppliers could use national flexibility to help reduce pressure on formula in the event of high demand, reduce balanced pricing, and deliver benefits to consumers. “
The trial comes less than a week after energy regulator Ofgem announced a 54% increase in its energy value cap for 22 million homes in England, Scotland and Wales, from £1,277 to just under £1,971 for those with average consumption levels.
This means that a family with an average consumption of a dual fuel variable tariff, paid by direct debit, will pay an additional £693 for energy from 1 April.
The government has responded to this unprecedented backlog by pronouncing £350 worth of aid to around 30 million families, adding a £150 reduction in council tax and a £200 loan to be repaid over five years from 2023.
As consumers reel from the 54% increase in the announced energy value cap (see articles below), the government has published an article – Busted: The nine Big Myths About Energy in the UK – aimed at dispelling “some of the popular myths surrounding values of emerging powers in the UK.
The effect of the value limit accrual will be to increase average annual expenses from £1,277 to £1,971 (from £1,309 to £2,017 for those with prepaid meters).
However, the magnitude of this widely expected increase has come as a huge surprise to the nearly 30 million families who will be affected.
The government’s proposals to cushion the blow – a £200 cut in spending in October (to be repaid over five years) and a £150 cut in council tax (which it does not want to be refunded) for those in parentheses A to D to coincide with the cap increase in April – have been described as insufficient and misguided by client teams and opposition parties.
Some called for more money to be spent on eliminating energy poverty, when energy expenditure pushes a family below the official poverty line.
Commentators point to Shell’s huge accumulation of operating profits (up to £12 billion by 2021, also announced) and urge the government to impose a providential tax on power-generating corporations that have profited from rising costs in wholesale markets.
There is no indication that the government is taking such a step.
We’ve published the government article below to provide a review of official thinking on the energy market, and we’ve added our own observation below each “myth. “
“No, the increase in energy prices is the result of a global increase in fuel prices, which has several causes, in addition to the rebound in global demand as COVID-19 lockdowns are eased and increased demand for liquefied vegetable fuel in Asia.
“In fact, the energy price cap continues for millions of consumers and ensures that they pay a fair price for their energy, despite the sudden rise in wholesale energy prices.
“But despite continued pressures on the cost of living, the government has announced a package to help families with emerging energy bills, worth £9. 1 billion between 2022 and 2023.
“This includes:
“Devolved administrations are also receiving an investment of around £715 million through the Barnett formula, as usual, where the UK government does not cover Scotland, Wales or Northern Ireland. “
We say: critics say that, even if a family receives the full £350, it will only be a part of the typical increase in expenses from 1 April, adding £200 in the form of a loan in October that will have to be repaid at £40 a year for five years. as of 2023.
There are also concerns about the management of the program, with suggestions that some people who don’t get the loan will still have to pay higher expenses if they feed clients in the coming years.
“No, because the limit on the value of energy is still in place for consumers. “
We say: electric corporations will not apply rates beyond the ceiling of popular variable rates. But the cap is widely expected to be raised again when it is reviewed in August for implementation in October. Therefore, even if the release of the public budget will not inflate prices, consumers will still face an additional increase in their bills.
“Neither the oil, nor fuel nor energy companies will gain financial advantages from the new systems announced and all the money will go back to the national energy consumers. “
We say: the energy value limit is structured in such a way as to prevent energy suppliers from making excessive profits; That was the concept when it emerged in 2019. But the impression remains that consumers are bearing an unfair burden in an era of higher wholesale values.
“As a commodity that is traded around the world, fuel is exported and imported according to value signals. Generally speaking, the UK imports more than it exports.
“The UK continues to ensure high security of fuel supply, benefiting from a wide variety of sources, adding one of the largest import infrastructures for liquefied vegetable fuels in Europe. “
Critics point out that the UK’s fuel depot capacity has been reduced especially in recent years, leaving the country exposed to short-term price fluctuations as there is still no option to pay market price lists to supply.
“The closure of coal-fired power plants increases energy prices. In line with our net-zero target, the government has committed to phasing out coal-fired electric power generation by 2024. Shutting down coal-fired power plants before that date is a business resolution for the corporations involved.
We say: the government wants to balance its commitment to transition to a net-zero carbon economy by 2050 with a desire to “keep the lights on” in the meantime. As that date approaches, you’ll be forced to make tougher decisions. on the use of carbon-based fuels, adding natural gas.
If credible and reliable opportunities for fossil fuels are not created in the short term, fuel will most likely remain a component of the mix, with all that this implies for national bills.
“Roughly some of the UK’s fuel source comes from domestic sources, and the UK fuel sector has maximised production as much as you can imagine over this winter.
“Most of the imports come from reliable suppliers like Norway. We also have one of the largest liquefied vegetable fuel (LNG) infrastructures in Europe.
“We are also working with oil and fuel operators in the UK to expand more fields. Three new fuel streams were brought into service last year with delay, and more to come. However, the main points influencing fuel costs are due to foreign activity that exceeds that of Great Britain. domestic production.
“In 2020, less than 3% of our fuel came from Russia. “
We say: the personal corporations that extract fuel from the North Sea and other fields in the UK sell their products on the open market where they can get the most productive price. They are not required to sell on the UK market at a subsidised or controlled price. It is hard to believe that a Conservative government is transforming this system.
“It is vital to note that wholesale fuel costs are being challenged around the world due to source and demand issues, with some countries in Europe in particular facing much more serious energy source security issues than the UK.
“The package announced by the Chancellor will allow millions of families to get up to £350 to help cover their living expenses. This is very much in line with the maximum presented by our European neighbours and, in many cases, is more generous. “
We say: Different countries are adopting other responses to the overall challenge of higher wholesale prices. For example, the French government has said that energy consumers only see their expenses grow by up to 4%, with the national energy operator, EDF, being to blame for the prices. beyond this level.
However, as EDF is owned by the French government, those prices will most likely form part of the country’s overall tax burden, which, in a sense, can be seen as a monetary sleight of hand.
“Decisions about the scale of capital investment in production and how profits are paid to investors are business decisions of corporations. The UK remains an attractive destination for corporations to invest in oil and fuel production.
We say: the Conservative Party is rooted in the market economy. It’s hard to believe that any change, even if the clash in Ukraine, with the consequent disruption of fuel supplies, can simply mean that all bets are cancelled, at least temporarily.
“The government is redoubling its efforts to produce more energy and energy in this country to meet the target of decarbonising the UK’s electricity formula by 2035.
“Since 2010, we have increased the percentage of electricity generated from renewables from 7% to 43% compared to 2020, and our most recent allocation circular from the successful Contracts for Difference program seeks up to 12 GW of additional renewable capacity. This would be more than the last 3 circulars combined.
What we are saying is that the government has set very ambitious targets for green energy that will require sustained investment. Their progress on those measures will be closely monitored, either through the green lobby or through those involved in security of supply.
The government is already grappling with the effects of the crisis, which most likely includes higher loan prices following yesterday’s increase in the bank rate to 0. 5%, higher National Insurance premiums from April, and inflation above 5%, which is expected to succeed in 7. % in the coming months.
The increase in the energy value limit adds to their problems, and there will be negative reporting circulars when the value limit increase goes into effect on April 1. We can probably expect to receive more messages of this nature in the coming weeks.
Almost 30 million families will see cuts to their bills and rebates of up to £350 following the 54% increase in the energy value cap announced earlier (see story below).
Chancellor Rishi Sunak told the House of Commons this morning that all domestic electricity consumers will get a £200 cut in their energy costs from October. In addition, 80% of families will get a £150 council tax refund from April.
Energy providers will apply the relief to 28 million domestic electricity consumers starting in October, with the government bearing the costs. The relief will then be recovered from individual expenses in instalments equivalent to £40 over the next five years.
This will start from 2023, when the government will claim that global wholesale fuel prices (the main reason for the 54% increase in the price cap) are falling.
English families in municipal tax brackets A-D will get a £150 reduction, paid directly through local government from April. This amount will not want to be refunded. The government is also making £144 million in discretionary investments available to other vulnerable and low-income people who do not pay council tax or pay for housing in the E-H bands.
The devolved governments of Scotland, Wales and Northern Ireland will get around £565 million in investment thanks to the relief of the municipal energy tax in England. Northern Ireland will get £150 million in additional investments for energy bill payers.
The Chancellor also today set out her aim to stick to existing proposals to increase eligibility for the Warm Home Discount by almost a third, until 3 million vulnerable families now benefit from it. The planned increase from £10 to £150 in October was also shown.
The energy price cap, which limits the amount businesses can qualify per unit of fuel and electric power supplied to domestic customers, as well as constant prices, will increase to 54% on April 1, 2022.
This means that the peak for a family with an average consumption of a popular dual-power variable-rate tariff, paid by direct debit, will rise to £693, from £1,277 to just under £1,971. The actual expenses will be covered with our minds through the amount of energy used.
Consumers of prepaid meters will see an increase of £708, from £1309 to £2017, for normal use.
The cap applies to around 22 million families in England, Scotland and Wales. Northern Ireland has no value limit.
The increase is due to wholesale fuel prices that remained at a peak in the six months to the end of January, the period used by Ofgem, the market regulator that sets the limit, to what should be the new level. Once it comes into effect from April, the cap is expected to remain at the same level until the end of September, when it will be adjusted again.
However, Ofgem is due to unveil measures later this week that could allow it to make changes more occasionally than every six months. He said: “Other measures come with Ofgem’s ability to update the value limit more than once. every six months in exceptional cases to ensure that it reflects the actual cost of energy supply. “
The price of wholesale fuel has been such that around 30 energy suppliers have closed their doors in recent months and their consumers have been transferred to larger competitors. The effect of the cap has been to prevent suppliers from charging enough to cover the cost of purchasing fuel. in bulk, which causes them to run at a loss.
Gas costs have risen in overseas markets due to strong post-Covid lockdown demand. Alternative energy sources, such as wind, solar and nuclear, have not been able to meet the needs.
The government is expected to announce measures today to help suffering families cope with the huge increase in costs. Chancellor of the Exchequer Rishi Sunak MP will hold a press conference tonight, in the hope that it will provide the main points of a fund. from which electric companies can borrow money to reduce the amount of the bill that accrues.
But since this is a loan, it is believed that expenses would have to remain artificially high, even after the end of the fuel crisis, to finance repayments.
Ofgem, the energy market regulator, is expected to announce the next point of its price cap (Thursday, February 3). The cap, which determines how much energy companies can qualify for according to the unit of fuel and electric power they supply to domestic customers, will be adjusted on April 1 and remain at the new point until Sept. 30.
The announcement scheduled for next Monday was brought forward because the government needs to come up with a package of measures to help suffering energy consumers.
The cap is expected to increase specifically from its current point of £1,277 per year (for typical families with a combined fuel and electricity tariff paying arrears) to around £2,000 per year.
The limit for families with prepaid meters, which lately stands at £1,309 a year for medium-service users, is also expected to increase dramatically.
Currently, there is no less expensive option for the cap, which means consumers who don’t have constant-rate offers don’t yet have the option to pay it. If the cap increases as expected, suppliers would possibly have the opportunity to lower it, but that can also prove difficult, as has been the rise in wholesale energy prices over the past year.
The buildup of the ceiling will push many households’ budgets to the limit and beyond. In response, the government is expected to announce a package of measures for customers, most likely as soon as Thursday afternoon.
We will provide you with the main points upon arrival.
British Gas is supporting Together Energy’s retail consumers after the Bristol-based company closed its doors last week (see article below).
The move was announced through Ofgem, the energy market retailer, which manages a safety net in the event of a company’s bankruptcy. Together Energy, which also uses the Bristol Energy brand, has 176,000 domestic consumers and 1 customer.
With the safety net, the cash that current and former domestic consumers of providers have deposited into their accounts will be on their credit. Domestic consumers will also be transferred to a British Gas tariff that is governed by Ofgem’s energy value limit.
There will be no interruption in the power supply. Together Energy consumers will be contacted about the changes in the coming days. If consumers switch providers, they can compare prices, but are asked to wait until the switch is complete.
Customers won’t be charged an exit payment if they transfer to another provider, although it’s highly unlikely they’ll find a rate below the maximum price, which stands at £1,277 per year for a typical family with a double-energy deal.
Customers who want more can touch British Gas.
The long-suffering UK energy sector was dealt a major blow today with the announcement of the closure of Together Energy Retail.
The company, which also manages Bristol Energy, has around 176,000 domestic consumers and one foreign customer.
Thanks to the protection controlled through Ofgem, the market regulator, energy materials will be kept for consumers and the budget that domestic consumers have paid into their accounts, when they are on credit, will be protected.
Domestic consumers will be transferred to a new supplier, whose new tariff will be through the energy price cap.
Customers will be contacted through their new in the coming weeks. This company will be selected through Ofgem following a tender process.
Ofgem’s recommendation is as follows:
Together is one of nearly 30 suppliers that have gone bankrupt in the past 12 months due to an unprecedented surge in global fuel prices.
The price cap means that suppliers must not pass on the full burden of energy payment to wholesale suppliers, meaning they are promoting at a loss to UK customers. This is why such a large number of business bankruptcies occur (and with no signs of significant relief in wholesale prices in the near future, there may simply be more to come.
Currently, the fare cap stands at £1277 per annum for an average customer family paying a dual fuel fare via direct debit. The new cap will be announced on Feb. 7 and go into effect on April 1.
Many analysts worry that it could reach £1,900 or even £2,000, pushing many households’ budgets to the limit.
Of course, the government and power companies are looking for tactics to reduce the impact of any price increases on consumers.
The energy price cap that has protected many UK families from the full effect of massive natural fuel price increases this year could be about to be updated as part of a reshuffle by industry regulator Ofgem.
Rules are being put in place so that the position of the energy market does not collapse, after a year in which 28 energy suppliers went bankrupt. Part of the changes relates to a revision of the value limit.
It’s an unprecedented year for power company bankruptcies. Record costs for herbal fuel (an increase of more than 250% since January) have put pressure on smaller suppliers with limited reserves, forcing many to pull out.
Suppliers said they were hampered by Ofgem’s energy price cap, which prevented consumers from raising prices but prevented companies from passing on their higher costs to payers.
Ofgem is investigating whether the price cap will be updated to better control market volatility.
The price cap limits the rates that a provider can apply to its default variable rates. These come with the constant rate and the value of the kilowatt-hour (kWh) of electricity and gas. Ofgem sets a new limit for summer and winter. reflecting global wholesale values.
The new limit is announced in August and February, with the update going into effect in April and October. The most recent update increases by 12% on October 1, bringing it to £1,277 a year for a family with an average consumption point.
The next update in April will be based on an agreed formula that takes into account wholesale energy prices between August 2021 and January 2022; Most likely, they will increase. Some commentators have said that a price increase of between £300 and £400 is anticipated. expected.
The cap is expected to end until the end of 2023, but could be modified or removed due to energy market turmoil in 2021.
Ofgem’s announcement to revise the energy price cap coincides with strong inflation.
Consumer Value Index inflation rose from 4. 2% to 5. 1% in November, according to data from the Office for National Statistics (ONS). The independent think tank Resolution Foundation said the figures will most likely affect living standards and predicts inflationary pressures will continue into early 2022.
Starting in January 2022, suppliers will need to go through currency stress tests to ensure they can cope with market pressures that could sink them if their finances aren’t strong enough.
Ofgem, which is introducing the new rules, will step in when weaknesses become known and discuss their situation with suppliers.
In addition to monetary stress testing, supplier forums will be required to conduct self-assessments of their control frameworks and report to Ofgem. The watchdog will also review its existing criteria for “fit and appropriate” energy licenses.
Other measures shown by the regulator include exploring how to apply regulations on protective credit balances, consulting on new financial licensing requirements, and the option of requiring providers to suspend expansion plans beyond certain milestones (such as 50,000 and 200,000 customers) until Ofgem is satisfied. They can be quite stable.
Most of this year’s business bankruptcies affected fewer than 200,000 customers.
Jonathan Brearly of Ofgem said: “Today I am proposing transparent measures for us to subject suppliers to rigorous stress tests so that they cannot pass on negligible hazards to consumers. I need to see more controls over staff in vital roles and greater use of knowledge to help us regulate.
He added: “Our priority has been and will be to act in the highest productive interest of energy consumers. The next few months will be challenging for many and we are working with the government and utilities to mitigate the impact as much as possible, namely on the most vulnerable households.
Zog Energy, which has 11,700 domestic consumers, has ceased operations. Thanks to the protection of the regulator Ofgem, which comes into play on the occasion of the bankruptcy of a company, the source of energy for Zog consumers will continue and the budget that domestic consumers have paid into their accounts will be protected, where they are creditors.
Domestic consumers will also exceed the energy value limit when transferring to a new supplier through Ofgem, as part of its last hotel supplier protocol. Customers will be contacted through their new supplier, which will be selected through Ofgem following a tender procedure among other suppliers.
Update: Ofgem announced on Dec. 3 that Zog consumers would be purchased through EDF.
Ofgem’s recommendation to affected consumers is to wait until EDF contacts them with the main points of their tariff and to have a meter reading as soon as possible to facilitate the moving process. It is not recommended to switch to a new provider when appointing a new provider.
In addition, existing market conditions mean that bids should not be received at a price lower than Ofgem’s maximum price, meaning that an upgrade would not bring any monetary benefit.
In addition, Ofgem has appointed Scottish Power to take over consumers of Entice Energy and Orbit Energy, which closed their doors last week (see article below). The 70,000 affected consumers will be contacted via Scottish Power in the coming days and weeks. There will be no interruptions at the source and the price at which they will move will be controlled through the Ofgem value limit.
In a statement published on its website, Zog blames its resolution on the bankruptcy of its wholesale fuel supplier, Contract Natural Gas (see article below from 3 November). The statement reads: “Zog Energy was founded to supply energy to its consumers at the highest conceivable productive price for money.
“Throughout our lives, we have invested in the most cost-effective generation at prices and purchased our fuel in advance from Contract Natural Gas Ltd to deliver on the promise we made to consumers to supply simple and reasonable domestic fuel.
“However, Contract Natural Gas Ltd withdrew from the wholesale market and ceased operations. Unfortunately, the administrators of Contract Natural Gas Ltd are not willing to move the fuel hedges we had agreed in the past. This has put us in an untenable position where we have to buy fuel at the existing market price and we still have no other option to avoid trading.
“Your energy source will now be transferred to a new supplier. Don’t worry; Your source is safe and the budget you have deposited into your accounts will be if credited.
Bankrupt energy company Bulb will be funded by taxpayers to the tune of £1. 7 billion after being placed under the Special Administration Scheme (SAR) through market regulator Ofgem.
The SAR procedure is designed to ensure that there will be no adjustments at source for Bulb consumers and to protect any credit balances they may have; Consumers have been told they don’t want to take any action at this time. Whoever is considering getting rid of Bulb will most likely be to find out that there are no competitive rates and that the best option is to stay put.
The administrator, Teneo, will run the company with the budget provided by the taxpayer until its future is settled, which may involve simply selling it in whole or in part, or finalizing it and moving its customers to other companies.
The government says it will work to recoup its expenses, “ensuring we get the result for Bulb consumers and the UK taxpayer. “
Bulb is the first company to adopt the SA regime, which was created in 2011 in anticipation of the bankruptcy of a supplier. With around 1. 7 million customers, it is more than 3 times the length of Avro, the first company to close in recent times. months.
The more than 20 utilities that have gone bankrupt since the summer have been subject to Ofgem’s Supplier of Last Resort (SoLR) procedure, in which a tender is held to find a supplier of choice willing to settle for the bankrupt company’s customers.
But wholesale prices are so high compared to Ofgem’s maximum value that it is believed that no supplier would be willing to take over Bulb’s operations, which would mean that they would be operating at a loss.
Update: Entice Energy, which includes Entice Energy Supply Limited and Simply Your Energy Limited, and Orbit Energy announced (November 25) that they will cease operations. As with other supplier errors (see stories below), customer materials will be guaranteed. through Ofgem, as well as any credit balances they have accumulated. Customers are kindly requested not to replace their supplier, but to read their meter and wait for news from their new supplier, appointed through Ofgem.
In a message to customers on its website, Bulb said: “We will continue to operate as usual, so you won’t want to take any action. Your rates are not replaced, and the value limit applies to all customer energy rates. If you pay for your energy is consistent with the load, your charge will continue to function normally. If you are in the process of switching to or from the bulb, your replacement will continue.
“We will continue to supply 100 percent renewable electric power and 100 percent carbon-neutral gas, and we will protect the credit balances of our national and advertising members in this process. “
Fuel costs in foreign wholesale markets have recently reached record highs as fears of a bloodless winter spark a sharp rise in demand. This will put even more pressure on energy suppliers, who rate popular variable tariffs more consistently with Ofgem’s price cap, which stands at £. 1,277 consistent with the year of a typical household.
Fixed interest rates, which are subject to the cap, sell for several hundred pounds more than the variable rate cap.
The maximum limit is reviewed and adjusted twice a year. Most likely, the next revision in February will see a sharp increase to reflect wholesale prices. Some commentators recommend that it can go up to £1,600 or more when replaced. It is implemented in April.
Ofgem has announced extensive information on how the cap works (see article below).
Green energy company Bulb announced that it had made “the difficult resolution to place Bulb under special management. “This is the first time that this agreement, designed through government and regulator Ofgem, to come into force following the bankruptcy of a primary energy carrier has been used.
The move means Bulb is the biggest company to fall since the energy market plunged into a crisis due to rising wholesale prices earlier this year. Bulb has around 1. 7 million consumers in the UK, making it the seventh-largest provider. Some 24 small suppliers have already ceased operations in 2021.
Bulb says a special management “is designed for Bulb members, making sure there’s no replacement at their source and their credit balance is depleted. “
The procedure means that Bulb will continue to operate and consumers will not have to take any action. The special administrator will be announced shortly. The settlement will remain in effect (paid through taxpayers) until Bulb is able to repair its own monetary health, the business is sold or liquidated, and its consumers are transferred to some other provider.
Bulb offers variable rate deals that are controlled through the energy value limit, which currently stands at £1,277 per year for families with typical usage. At this time, there are no price lists that can be had as a component of the maximum value in other parts of the world. market, which means that it is effectively not worth leaving Bulb given the protections offered by the special management regime.
The length of Bulb means it’s unrealistic for another company to take care of its consumers, as has been the case with more than 20 companies that went bankrupt in recent months under Ofgem’s “supplier of last resort” scheme. Companies recruiting consumers in such scenarios are not allowed to rate more than the maximum Ofgem value (£1,277 a year for average households), with many arguing that the point of wholesale values would force them to operate at a loss.
A notice about Bulb states: “The special control is designed to allow the Bulb to continue to operate as usual so that you don’t have to take any action. Your rates are not replaced, and the value limit applies to all customer energy rates.
“If you pay for your energy according to the load, your load will continue to work normally. If you are in the process of switching to or from the Bulb, your replacement will continue. Smart meter installations and dashboards will continue.
An Ofgem spokesperson said: “Bulb consumers don’t want to worry: Bulb will continue to operate normally. Ofgem works very intensively with the government. This includes Ofgem’s plan to go to court to appoint a director to run the company. Customers will not see any disruption to their source and account and fees will continue as normal. Bulb staff will be on hand to answer calls and questions.
Bulb also stands out for its offer of 100% renewable electricity and 100% carbon-neutral gas.
Energy market regulator Ofgem has published a series of consultations on the future of its value cap. The goal is to “ensure that the value limit reflects the costs, risks, and uncertainties faced by energy suppliers. “
This may simply mean that the limit would be adjusted more than every six months (in April and October), which is the current cycle.
Many suppliers claim that the maximum limit (£1,277 per year for popular variable tariff consumers with average consumption and £1,309 per year for prepaid tariff consumers with average consumption) is set too low for wholesale market prices for electricity and, in particular, gases.
Companies claim that they can’t pass on the actual energy load, leading them to run at a loss. More than 20 suppliers have ceased operations in recent months.
However, the limit has already been particularly higher this year (9% in April and 12% in October), putting enormous pressure on household budgets. The Office for National Statistics and the Bank of England said energy costs are a key contributor to inflation, which hit a 10-year high last month at 4. 2%.
The limit will be adjusted in April 2022, with the update to be announced in February. It is feared that this increase will add an extra £300 to £400 to annual bills.
One of the published queries will read about whether recent market volatility “has caused the value limit point to deviate particularly from the effective charge point allowed at the value limit. “
In other words, Ofgem needs to know that the current level of the limit is sufficient to allow suppliers to cover their expenses and earn an agreed level of profit.
A second query will look at the process of updating the method that determines the limit of the limit. Ofgem proposes to amend its licence to allow it to replace the outdoor limit of the existing six-month cycle from April to October in exceptional circumstances. .
More details on these and other queries about the technical aspects of value limits can be found here.
Stakeholder perspectives on all facets of those documents are sought until 17 December 2021, and conclusions and decisions will be published in the new year.
Update 22 November: British Gas has been designated as a “supplier of last resort” for customers of Neon Reef and Social Supply, which ceased operations at the beginning of the month (see next article).
Two other power corporations have ceased operations, bringing the total number of delinquent suppliers to 24 in 2021 alone. This unprecedented market disruption is due to persistently high wholesale prices, which suppliers are largely unable to pass on to their consumers due to regulations. pricing. cap (see stories below).
The last two affected are Neon Reef and Social Energy Supply. Last week, Ofgem indexed Social Energy Supply as one of the corporations that defaulted on their bills in the energy market (see below).
Neon Reef approximately 30,000 domestic consumers with electricity and Social Energy Supply Ltd approximately 5,500 domestic consumers.
Under the safety net measures maintained through regulator Ofgem, consumers of either corporation will not see any disruption at their source and the budget entered into their accounts will be protected, where they are credited. Ofgem will appoint a new supplier for each company’s domestic consumers, who will be protected by the energy price cap when switching to the new company.
This means that your new tariff will charge no more than £1,277 per year if you are a typical family with average usage (£1,309 for prepaid customers). The cap regulates how much suppliers can qualify per unit of fuel and electric power and for any ongoing charges, so actual expenses are determined through the amount of energy used.
Since some consumers at bankrupt businesses would have arguably benefited from less expensive offerings, they may also see their expenses increase when they switch to their new provider.
Ofgem will appoint new suppliers in the coming days following a tender procedure. The newly appointed companies will then communicate to consumers the main points of the new provisions. Customers are requested not to replace until the procedure is complete, but are advised to read the meter as soon as possible to facilitate the procedure of switching from the old company to the new one.
Ofgem, the energy market regulator, has ordered five suppliers to pay more than half a million pounds they owe or threaten to waste their licences.
Suppliers owe Ofgem a collective £575,000 in invoices, a government scheme that compensates owners of small renewable energy generators.
All energy providers are required to contribute to the feed-in tariff program as part of their licensing conditions, but five suppliers missed the Nov. 10 deadline to submit bills this week.
The largest percentage of missing bills is due through Orbit Energy (£451,296), while the rest of the debt is owed through Delta Gas and Power (£46,701), Social Energy Supply (£28,735), Simply Your Energy/Entice (£28,353) and Whoop Energy (£19,013).
Ofgem has asked providers to pay what they owe immediately, or face enforcement actions that could have monetary consequences or the withdrawal of their license.
This demand comes at a difficult time for smaller utilities struggling to keep up with emerging wholesale prices, especially for natural gas, which has risen 250% since the beginning of the year.
Twenty providers have closed since the summer and six were added this month, affecting more than two million home energy customers.
Affected consumers go through the backing of Ofgem which promises them supply, transfers them to another supplier’s books and keeps the cash they have paid in their accounts, where they are creditors.
Customers of companies that cease operations are requested to replace themselves until the switch to the new Ofgem-designated provider has been completed.
In accordance with its “safety net” protocols in the market, energy regulator Ofgem has appointed suppliers to take over the energy source for consumers of corporations that have recently ceased operations due to adverse market conditions, basically due to skyrocketing wholesale prices of vegetable fuels.
Ofgem, which regulates domestic and advertising providers, says the adjustments will affect 70,600 domestic and non-domestic customers.
The announced adjustments include:
Ofgem carries out a competitive procedure to ensure the most productive treatment for consumers. The procedure ensures that there will be no interruption in supply and that the energy supply will continue as normal once consumers transfer to their new suppliers.
Funds paid through existing and previous domestic clients into their accounts will be made through Ofgem, where clients are credited. Domestic consumers will also go through the energy value limit with their new supplier, meaning they will pay no more than the existing limit (£1,277 for medium-service households) on their new tariff.
Customers whose suppliers have ceased operations will be contacted in the coming days about the changes. If consumers switch providers, they can shop around, but Ofgem advises them to wait until the switch is complete.
It is important that they read the meters as soon as possible, as this will make the transfer to the new provider less complicated.
If, when the time comes, consumers replace the supplier, they will not be charged any exit fees.
Neil Lawrence, director of retail at Ofgem, said: “We think this news could be unsettling for customers, but they don’t want to worry. Your power source will continue with the general one and domestic customers’ credit balances will be honored, as well as some non-domestic credit balances.
“Your power source will be interrupted and your new provider will contact you in the coming days to provide more information. If consumers need to switch providers, they can compare prices if they wish, but are asked to wait until the move is made. complete.
CNG Energy Limited, an advertising energy provider with around 41,000 foreign customers, has shut down. A message on its site reads: “After 27 years, we are saddened to announce that CNG Energy Limited is ceasing operations. “
This news follows the demise earlier this week of electric utilities with household consumers (see article below).
As is the case when power companies go bankrupt, the regulator, Ofgem, will ensure continuity of supply to CNG customers. However, the component of the Ofgem endorsement that guarantees the budget that national customers have paid into their accounts, where they are creditors, will be protected, it does not apply in the case of CNG advertising customers.
Similarly, while domestic consumers of a bankrupt supplier exceed Ofgem’s energy value limit when they transfer to a new supplier, commercial consumers do not have this certainty.
The prestige of CNG consumers in terms of credit balances and price lists will be decided through their new supplier, who will be appointed through Ofgem in the coming days.
CNG consumers are kindly requested not to switch suppliers until they have been moved to their new supplier, but read the meters to facilitate the switching procedure when this happens.
On a dark day for the UK energy market, four more energy suppliers shut down, joining Bluegreen Energy, whose demise was announced yesterday.
The latest to be affected by the crisis, caused by the sharp increase in wholesale energy prices over the last 12 months, are:
Thanks to Ofgem’s support, consumers’ energy materials will continue and the budget that domestic consumers have put into their accounts will be in the place where they are creditors. Domestic consumers will also exceed the limit on the value of energy when transferring suppliers.
Customers of these providers will be contacted through their new provider, who will be selected through Ofgem. See the story below to learn more about the procedure of switching to a new provider.
Ofgem, the energy market regulator, has announced that Bluegreen Energy Services Limited will cease operations.
Bluegreen Energy serves approximately 5,900 domestic consumers and a small number of non-domestic consumers. In a statement, he said: “Due to the energy crisis in the UK, we are in an unsustainable scenario and Bluegreen Energy Services Limited is forced to make the difficult resolution to halt operations. “
Ofgem’s endorsement that consumers’ energy source will continue and the budget that domestic consumers have put into their accounts will be protected, wherever it is credited.
Domestic consumers will be transferred en bloc to a new supplier, selected through Ofgem, in the coming days. The new tariff at which they will be transferred will not exceed the maximum value set by the regulator, which limits the amount that suppliers can tariff per unit of fuel and electrical energy used.
The existing limit is £1,277 per year for a typical average household consumption. How this limit is set is currently under scrutiny, with energy suppliers saying it forces them to run at a loss due to high wholesale energy prices. But any building ceiling increase at its next review in early 2022 will put more pressure on household budgets, which are already stretched to the limit.
Last week, Ofgem announced a consultation procedure on how the cap works.
Ofgem’s recommendation to Bluegreen Energy consumers is to transfer suppliers for the time being. He says they should:
Ofgem, the energy market regulator, has tasked Shell Energy Retail with supporting consumers of bankrupt energy companies GOTO, Pure Planet, Daligas and Colorado Energy.
This resolution affects a total of around 275,000 national consumers and six hundred non-national consumers.
As with other visitor transfers (see stories below), any credit balance that domestic consumers have paid into their accounts will be and there will be no interruption of supply.
Domestic consumers will benefit from a Shell Energy tariff capped by Ofgem’s energy value cap, which is currently £1,277 per annum for families per average amount of energy. Once the measure is complete, consumers can replace without penalty. Due to existing market conditions, such as the wholesale natural gas price cap, it is unlikely that transactions below the cap can be made before early 2022.
Customers of all three providers will learn of the changes in the coming days. Ofgem says that, in the meantime, they are waiting for Shell Energy to contact them and not transfer corporations.
GOTO Energy Limited will suspend operations with immediate effect. The company supplies fuel and electricity to 22,000 customers nationwide. It is the 13th supplier to go bankrupt since September, as the UK market reels from skyrocketing wholesale energy prices.
Under back-up agreements overseen through energy regulator Ofgem, energy materials for consumers will continue uninterrupted. The budget that domestic consumers have deposited in their accounts will be the credit they have.
Domestic consumers will be transferred en bloc to a new Ofgem provider. The new tariff presented to them will be protected by Ofgem’s energy value limit, which stands at £1,277 per year for families with average consumption. The amount of expenses will be compensated to our minds through the amount of energy consumed.
The price lists implemented within the cap are currently the cheapest on the market thanks to the unprecedented wholesale energy price in foreign markets. However, consumers are free to leave the new provider, without penalty, if they wish.
In the meantime, Ofgem’s recommendation to those affected is as follows:
Daligas Limited has announced the cessation of its operations. The announcement comes a day after the closure of Pure Pla and Colorado Energy, leaving 250,000 domestic consumers relying on protection from regulator Ofgem (see article below).
Dalifuel’s bankruptcy means that 12 energy suppliers have gone bankrupt since the beginning of September. All of them have been affected by the peak energy load – especially plant fuel – in wholesale markets.
With 9,000 domestic and domestic customers, Daligas Limited, a gas-only company, is one of the smallest corporations in the sector; however, today’s announcement will be seen as further evidence of the turbulence affecting the UK energy market as a whole.
In order to be able to offer reasonable prices while wholesale costs rise rapidly, corporations will have to have purchased gigantic quantities of stock at affordable costs, a procedure known as hedging. Many small businesses with modest monetary resources have not been able to secure long-term guarantees. source and have found that existing spot costs are out of reach.
What’s more, Ofgem’s price cap on how much companies can qualify on its “predetermined” variable-rate price lists means that companies can’t pass on the full cost of wholesale energy purchased to their customers.
As in previous corporate bankruptcies, the origin of Daligas’ domestic consumers will be guaranteed through Ofgem, along with the balance of their credits, until a new carrier is found to resume operations. An announcement about the new carrier may be made in the coming days. , reports recommend that the remaining viable operators are increasingly reluctant to settle for new consumers en bloc as they are expected to serve them at a loss.
If Ofgem is unable to locate a “provider of last resort” for a bankrupt company’s customers, it has the strength to appoint a special administrator to manage the bankrupt company until a permanent replacement can be found.
The costs associated with moving consumers to a new supplier would amount to hundreds of euros depending on the account, a charge that would eventually be passed on to all energy expenses and fees imposed on surviving suppliers.
The regulator says consumers of all bankrupt companies, Daligas adds, deserve to be reassured and not replace, but wait to hear from their new supplier. However, they will have to read the meter as soon as possible before they can supply it to the consumer. New supplier in smart time.
Pure Planet Limited and Colorado Energy Limited have announced that they are shutting down their business operations. Pure Planet fuel and electric power to approximately 235,000 domestic consumers and Colorado Energy fuel and electric power to approximately 15,000 domestic consumers.
This brings to 11 the total number of electric corporations that have gone bankrupt since the beginning of September due to pressures from rising wholesale costs (see articles below).
The market regulator, Ofgem, manages a back-up network to ensure the continuity of consumers’ energy source and the coverage of any credit on consumers’ accounts. Domestic business consumers will be moving en masse to new suppliers through Ofgem, where they will be through the energy price cap, which currently stands at £1,277 per annum for typical dual energy consumption families with the popular variable rate default tariffs.
Customers will be contacted through their new supplier, who will be selected through Ofgem in the coming days.
Ofgem’s recommendation to those affected is as follows:
Ofgem says it is working intensively with government and industry to ensure consumers stay that way this winter. Neil Lawrence, director of retail at Ofgem, said: “Our number one priority is to protect consumers. We know that this is a troubling time for many others and that the announcement of a supplier’s bankruptcy can be destabilizing.
“I need to reassure the consumers involved that they don’t have to worry. With our safety net, we’ll make sure your power source continues. If you have credits in your account, the budget you’ve paid is and you won’t lose them. the cash you are owed.
“Ofgem will decide on a new supplier for you and in the meantime our recommendation is to wait until we appoint a new supplier and not replace them in the meantime. It can depend on your power source normally. We’ll keep you informed when we’ve selected a new supplier, who will then contact you to let you know their pricing.
Customers with questions should check out the FAQs on the Ofgem website.
Ofgem, the energy market regulator, has appointed E. ON Next to take over Enstroga’s customers, Igloo Energy and Symbio Energy, which announced last week that they would cease trading activities (see below). This resolution increases the number of E. ON Siguientes to 233,000 homes.
The change, announced today, is effective as of yesterday. Ofgem promises that there will be no disruption in supply, as there is when consumers switch to a new supplier. All credit balances in the account are also protected. The regulator urges consumers not to switch providers until the switching procedure is complete.
Transferred consumers will be made through the energy value cap, which increased on Friday to £1,277 per year for consumers with the popular “default” variable rate tariff that employs a typical amount of energy. Therefore, many consumers of ENSTROGA, Igloo Energy and Symbio Energy would see their expenses increase if they had a less expensive package in the past.
However, the current energy market crisis (see below) means that those less expensive bids have been withdrawn from the market, leaving the default price lists governed by the cap as the lowest costs that can be obtained in the maximum of cases.
That said, transferred consumers can shop around and replace once their transition to E. ON Next is complete. Customers will not be charged an outbound payment if they transfer to another provider at that time.
Anyone whose replacement was already in progress when their original provider ceased operations will have their replacement honored.
More information on the following E. ON will be available:
Ofgem, the energy regulator, has announced that 3 more energy suppliers will cease operations. This means that nine corporations have closed their doors in recent weeks in reaction to rising wholesale energy prices, which meant they were operating at a loss (see articles below).
Today’s announcement lists Igloo Energy (179,000 domestic consumers), Symbio Energy (48,000) and ENSTROGA (6,000) as the most recent failures. Ofgem says that in combination they account for less than 1% of household consumers in the market. In total, only about two million families have been affected by the recent landslides.
As part of Ofgem’s endorsement, consumers of bankrupt businesses will continue to get fuel and electric power without interruption and credit balances in visitors’ accounts will be honoured when a new supplier is appointed for each business.
Domestic consumers of each company will be transferred en bloc to the considered tariff of their respective new supplier. This will be subject to Ofgem’s price cap, which amounts to £1,277 (from 1 October) for families with typical use.
New providers will reach out to consumers in a timely manner to provide them with more information. Ofgem usually designates “providers of last resort” within a few days. Meanwhile, no action is required from consumers beyond reading the meter in the shortest possible time. time. There’s no need to move vendors. This will become an option once the switch to the new provider is finalized.
Neil Lawrence from Ofgem said: “Our number one priority is customers. We know that this is a scary time for many other people and that the announcement of a provider’s bankruptcy can be concerning.
“I need to reassure consumers of ENSTROGA, Igloo Energy and Symbio Energy that they don’t have to worry. With our safety net, we’ll make sure your power source continues. If you have credits in your ENSTROGA, Igloo Energy, or Symbio Energy account, the budget you’ve paid is and you won’t lose the cash you’re owed.
“Ofgem will decide on a new supplier for you and in the meantime our recommendation is to wait until we appoint a new supplier and not replace them in the meantime. It can depend on your power source normally. We’ll keep you informed when we’ve selected a new supplier, who will then contact you to let you know their pricing.
“In recent weeks, we have noticed an unprecedented increase in global fuel prices, which is putting monetary pressure on suppliers. Ofgem is working intensively with government and industry to ensure consumers continue this winter.
Customers of bankrupt energy company Green Supplier will now be served through Shell Energy, energy regulator Ofgem announced. The measure of 255,000 domestic consumers and a small number of non-domestic consumers is effective immediately, and Shell Energy will contact those affected in the coming days and weeks.
Ofgem said Octopus had taken over consumers from Avro Energy, which announced last week it would cease operations. Other corporations that have announced their closures in recent weeks include PfP Energy, MoneyPlus Energy, People’s Energy, and Utility Point (see articles below). ).
As detailed below, Ofgem’s safety net procedures ensure continuity of the source of credits and protect account movement.
Customers of bankrupt companies will be transferred to “presumptive” contracts with their new supplier, controlled through Ofgem’s price cap.
Consumers of green suppliers can contact Shell Energy for more information: 0330 094 5804 or Green@shellenergy. co. uk.
More business closures are expected as suppliers struggle to cope with the emerging energy load in wholesale markets, and the energy cap restricts how much of this additional load they can pass on to their customers.
The government and Ofgem have issued statements assuring consumers that there is no risk when sourcing from the UK during the winter months.
Energy market regulator Ofgem has appointed Octopus Energy for the 580,000 domestic consumers of Avro Energy, which announced it was going out of business last week. The resolution comes into force from today (26 September).
Green Supplier Limited also announced last week that it would cease operations. An announcement is expected in the coming days on which company will onboard its 255,000 consumers as part of Ofgem’s “safety net” process.
This ensures that consumers of any failing electric utility will not suffer supply interruptions while their account is transferred to the new company, known as a “provider of last resort. “Any credit balance is also protected.
Octopus will be contacting Avro consumers in the coming days to provide information about the change. Customers will be switched to a “reputable” contract with a maximum value consistent with the power unit in accordance with Ofgem’s value limit.
From 1 October, this amount increases to £1277 per year for a family with a typical point of consumption, a 12% increase. Since many cheaper constant deals have been taken off the market, this is most likely Smart Pricing for Cash right now, many Avro consumers will inevitably find themselves paying more than before.
Once the transfer to Octopus is complete, Avro consumers can upgrade to the offer.
Ofgem says Avro consumers don’t want to cancel direct debits they’ve made with the company. He says, “You don’t want to cancel your direct debit, but you can if you want. Octopus Energy will contact you to find out if your existing direct debit will remain in place or if they will set up a new direct debit.
More can be found out at www. octopus. energy/avro and on the Ofgem website.
The government has taken the step of publishing a Q&A consultation to allow consumers to “learn more about energy costs and energy suppliers. “
At Forbes Advisor, they tackled those issues on this page and elsewhere, addressing vital issues like the default value limit and the safety net that ensures continuity of supply to consumers from failing energy suppliers.
But we thought it would be interesting for you to read the government’s statements on those issues, as published today. . .
You don’t have to be. Although global wholesale fuel prices have been high lately, we are confident that the safety of the UK’s energy source is guaranteed now and through the winter.
No, it isn’t. Even if your supplier goes down, Ofgem – the independent electricity regulator – will transfer you to a new supplier so that there is no interruption in your electricity supply.
It is not uncommon for energy suppliers to leave the market. There is a well-oiled formula to protect families and ensure the maintenance of their fuel and electricity.
Bankrupt utility users who transfer to a new supplier exceed the energy value limit.
It’s a government program that protects millions of people from surges in global fuel costs and limits the amount an energy provider can qualify to those who take advantage of predetermined or popular variable tariffs.
Suppliers rate consumers from delinquent suppliers above the maximum value level.
Major energy suppliers also buy much of their materials in bulk months in advance, protecting them and their consumers from short-term price spikes.
We will also offer many other systems to vulnerable and low-income households, adding the warm housing rebate, winter fuel payments, and cold weather payments.
The energy price cap is reviewed twice a year based on the latest estimates of energy source prices and announced this summer that from October 1 the cap would increase due to rising wholesale fuel prices.
However, the next time the value limit will be updated will be in April 2022, meaning consumers it protects won’t have to worry about it increasing before then.
The capacity of the gas tank has little influence on the value of the fuel. Some other countries buy fuel to ensure their own security of supply, however, the UK enjoys access to highly diversified and secure North Sea fuel resources and reliable import partners such as Norway. .
Energy market watchdog Ofgem has ordered five small suppliers to pay around £765,000 they owe to a government renewable energy scheme. The finances of many energy suppliers are being affected by rising wholesale energy prices.
Colorado Energy, Igloo, Neon Reef, Whoop Energy and Symbio Energy have all contributed to the feed-in rate program (FIT), which supplies bills to owners of small renewable energy producers.
The FIT is designed to promote the adoption of smaller-scale renewable and low-carbon electric power generation. Providers are required to contribute to the program as a condition of obtaining their source licenses, and the regulator, which administers the FIT program, asks that everyone pay their contribution.
The deadline for payment is September 17. Colorado Energy still owes £261,406. 12, Igloo owes £316,582. 44, Neon Reef £37,350. 76, Whoop Energy £3,780. 22 and Symbio Energy £146,238. 66.
Ofgem says unfulfilled bills will delay bills to renewable energy producers. He warned the five suppliers that if invoices were submitted, enforcement action could simply be taken, which could include the removal of their licenses or the imposition of monetary penalties.
Ofgem’s lawsuits will put further pressure on the finances of the corporations involved, at a time when the fragility of some energy suppliers’ capital resources is highlighted through emerging wholesale prices. Six smaller suppliers have gone bankrupt in recent weeks, including Avro Energy and Green Supplier. Limited is now the fifth and sixth provider to close its doors in recent years, impacting more than 800,000 consumers (see story below).
The other four that recently ceased operations (PfP Energy, MoneyPlus Energy, People’s Energy and Utility Point) had about 600,000 consumers on their accounts.
Affected customers’ accounts are being transferred to one of the UK’s major energy suppliers as part of Ofgem’s “backup” procedure that ensures supplies to homes will be cut off and credit balances will be protected.
Ofgem has commissioned EDF Energy to 220,000 Utility Point and British Gas customers to do the same for People’s Energy consumers.
Amid growing fears of bankruptcies of more suppliers, Business Secretary Kwasi Kwarteng MP told parliament last week that he would subsidise struggling power companies.
He said, “The government will not bail out bankrupt corporations. There will be no praise for failure or mismanagement. Taxpayers don’t deserve to be expected to be expected by corporations with poor business models that aren’t resilient to fluctuations in value. “
Kwarteng also said advice to return to blackouts and the three-day working week like in the 1970s was alarmist and unnecessary.
Avro Energy and Green Supplier Limited ceased business operations, with the fifth and sixth energy suppliers closing their doors in just over a week.
Avro Energy supplies fuel and electricity to approximately 580,000 domestic consumers, while Green Supplier Limited supplies fuel and electricity to approximately 255,000 domestic consumers and a small number of non-domestic consumers.
Together, they make up only 3% of the domestic visitor base in the market.
Ofgem’s support will be that there will be no interruptions in the power source for business consumers and that important credit balances (of domestic consumers) will be protected.
Domestic consumers will also exceed the energy price cap when switching to a new supplier as per the regulator’s procedure in such situations.
Ofgem’s recommendation to consumers of Avro Energy and Green Supplier Limited includes:
This will make the procedure of transferring consumers to selected ones and settling significant credit balances as simple as possible.
The taxpayer will have to fund the operations of a US fertilizer maker which has shut down two British plants due to rising energy prices.
The move comes as the government grapples with a deepening energy crisis that has driven several suppliers out of business and threatened millions of consumers and businesses with higher energy bills. But it rules our state for energy suppliers facing insolvency and closure.
Four power corporations have ceased operations in recent days, with more expected to follow. Customers of failed suppliers are transferred to a new supplier, with no loss of source and with protected credit balances, thanks to a “safety net” controlled through energy. market regulator, Ofgem.
The government’s three-week deal with CF Fertilisers, announced through MP Kwasi Kwarteng, Business Secretary, will protect the source of CO2, which is a by-product of its production process.
CF Fertilizers produces around 60% of the UK’s CO2, which is used in the slaughter of animals such as poultry and pigs, in food packaging and in the production of convenience drinks, and has many programmes in industry, in the healthcare and nuclear sectors. .
Under the terms of the agreement, the government will provide “limited monetary support” to CF Fertilisers’ operating prices at its Teesside plant for three weeks “while the CO2 market adjusts to global fuel prices. “
Kwarteng had earlier delivered a speech to Parliament in which he said: “We have enough capacity and more than enough capacity to meet demand, and we anticipate source crises this winter.
“There’s no question that the lamps will go out or that people won’t be able to heat their homes. There won’t be a three-day work week or a return to the 1970s. Such thinking is alarmist, dead, and surely wrong. “
However, he stressed that the government would not inject cash into energy suppliers to keep them afloat: “The government will not bail out bankrupt corporations. There will be no praise for failure or mismanagement. Taxpayers don’t deserve to be expected to expect corporations with poor revenue to have business models that aren’t resilient to fluctuations in value. “
As well as highlighting the merits of Ofgem’s backing, Kwarteng said the regulator’s energy price cap is “going nowhere” and would remain in position to protect consumers from “price spikes”.
The cap applies to the popular default variable price lists and prepayment price lists and benefits about 15 million households. These rates have been some of the most expensive on the market, but emerging wholesale prices mean that the cheapest fixed-rate offerings have been pulled from the market. market in many cases.
The latest version of Ofgem’s price cap comes into effect on October 1 and will remain in effect until March 31, 2022. The net effect of the cap is to insulate the affected stock lists from further increases in the wholesale energy rate.
This means that many suppliers will sell fuel and electric power to consumers at a price below cost, which is why more suppliers are expected.
The limit is expected to increase dramatically at the next adjustment in April next year. The new point will be announced in February and will reflect wholesale costs in the second part of 2021.
Kwarteng insists that reducing the number of suppliers does not bring relief from competition: “We must not return to the ‘comfortable oligopoly’ of years past, where a few giant suppliers simply dictated their terms and prices to consumers. »
For more facts on how to respond to the energy crisis, check out our stories below.
As the government holds emergency meetings with the power sector and commentators expect additional bankruptcies of small and medium-sized suppliers, consumers are experiencing an era of concern. So what do you do, if at all?
Your course of action will depend in large part on your existing energy agreements. Here are answers to some common questions to help you ensure you get the most productive price imaginable in a turbulent and troubled market.
If you’re not sure about your rate, or even the identity of your provider, look for a recent bill (or bills, if you have separate electric and gas providers). Here you will find all the data you want about your electric company. IES), as well as the main points of your tariff(s).
If you’ve never changed providers or haven’t done so in more than two years, you’re most likely subject to a default arrangement (SVT): around 11 million families in the UK benefit from one of these fees, the value you pay which can be adjusted through your provider at any time, as long as they give you 30 days in advance to make the increase.
Prior to the current price crisis, these open-ended predetermined contracts were some of the most expensive on the market, and it was advisable to move to a less expensive fixed-term, fixed-rate contract; Dozens were regularly available.
But that has changed. Currently, default bids are among the most competitive. You can do an energy quote to see if anything cheaper is available, but chances are your most productive bet is to sit back and wait for prices to drop.
The maximum prices in the predetermined price lists are governed by a limit controlled by Ofgem, the electricity market regulator. This amount is adjusted every April and October, and next month it will increase by up to 12% to £1,277 for typical customer households. , and providers are increasing their costs to make the most of it.
This accumulation is frightening; However, the crisis in the wholesale energy market is such that predetermined agreements are still very likely to be among the most advantageous among those available.
Prepayment rates (around 4 million UK families have one) are also subject to an Ofgem cap. This amount will increase from £153 to £1,309 on October 1 (again for those with average admission levels).
Checking to see if there’s a cheaper deal is a good idea, but as with default rates, you may find that you’re getting a competitive plan, even after the next price increase.
Some thirteen million British households benefit from constant tariffs, where the value of the unit of energy used is fixed for a short period of 12 to 24 months.
Traditionally, these offer the most productive cost for money, with values many pounds below Ofgem’s maximum value, and guaranteed to remain unchanged no matter what happens in the wider market. But over the past week, steady rates have skyrocketed and many corporations have stopped providing them to new customers.
If it’s already a patch, your most productive bet is almost certainly to stay put until the end. At this point, if you don’t do anything, it will be transferred to your provider’s default sliding rate rate. But as your rate ends closer to the date, you can combine a quote to see if there are any other, less expensive solutions you can migrate to (if you replace within six weeks of your rate’s end date, you may not pay any exit fees if your current rate deal takes them away).
It may simply be that the default offer represents a smart price for cash at the time, or you can ask your current provider if they will offer a rate that would charge you less.
Remember, you can transfer from a sliding rate offer at any time without penalty, so if you opt for one, you can forgo it if a less expensive offer is found elsewhere.
A small number of families take advantage of “selected” variable rate offers that, until recently, were priced lower than the more expensive default variable rate options. In fact, they were equivalent, or even cheaper, than constant-rate offerings.
However, the costs of those competitive floating-rate rates have risen, and many have been removed from the market to attract new customers. So if you have one of those packages, you contact your provider to verify that you have it. I won’t offer a less expensive option.
If that doesn’t work, you can do an electric quote to see if there’s a bigger offer, adding popular variable-rate offers.
We hear many hypotheses in the press that an organization of small and medium-sized energy suppliers could go bankrupt in the coming days and weeks if the government doesn’t interfere with a radical plan.
The important thing is that Ofgem, the regulator, prioritises continuity of supply, so it will ensure that consumers of any company that goes bankrupt are transferred to another supplier; This is called “security. “net’ that ensures consumers don’t lose power.
Again, the government says this is a tactic to make the safety net as strong as possible. This may involve simply advancing state-guaranteed loans to inspire corporations to recruit consumers from failing providers.
If you’re worried about the viability of your energy provider, switching to another company probably isn’t the best solution right now. First, you may not be able to find a moderate rate to move to, and second, your interests will be protected through the backstop.
This is not meant to minimize the anxiety that such conditions can cause: learning that your provider has gone bankrupt will come as a shock. But it’s reassuring to know that there’s a formula out there to ensure any negative effects on your person. kept to an absolute minimum.
Energy market regulator Ofgem has appointed primary energy EDF to take over Utility Point’s 220,000 domestic consumers and arranged for British Gas to do the same for People’s Energy after the two smaller corporations went out of business last week (see story below).
Whenever an electric utility ceases operations, Ofgem’s backup protocols come into effect so that customers’ electrical material is not interrupted and that credit balances held with the company are protected. Part of the procedure includes the designation of a “supplier of last resort”, in this case EDF and British Gas, following a call for tenders between interested suppliers.
The move comes as the energy market as a whole is experiencing unprecedented disruption due to skyrocketing prices for plant fuels and electric power in full-sell markets (see story below). Many suppliers prevent marketing their products to new consumers because the costs are too high. In many cases, the cheapest deals presented are the default variable interest rates, which are traditionally among the most expensive on the market.
The amount that suppliers can rate consumers on the default price lists is limited by Ofgem’s tariff cap. This amount increases by 12% to £1277 per year for a family with an average intake on 1 October 2021. The accumulation is calculated during the summer before the current price crisis completely took over foreign energy exchanges, and is now estimated to be much lower.
There are fears that this could limit smaller suppliers with fewer capital resources, leading to more corporate bankruptcies, consolidation of the market in the hands of larger suppliers, and eventually reduced competition.
Ofgem is also likely to increase its limit via a significant amount at the next opportunity in April 2022, bringing it to over £1,550 per year for average users.
Reportedly, the government will hold crisis negotiations this weekend with representatives of the energy market to ensure continuity of supply to families and businesses.
Ofgem’s recommendation to Utility Point and People’s Energy consumers is to wait for EDF or British Gas to provide them with personalised data on their new “presumptive” tariff in the coming days. Traditionally, “presumptive” price lists were more expensive than other price lists. It can be obtained from the same company or in the broader market, but unless wholesale market prices drop drastically, this may no longer be the case.
However, once their new account is opened with their new supplier, consumers of the two bankrupt companies can look for a less expensive energy deal if they so choose.
Ofgem said: “If consumers need to replace their tariff or replace their provider, they ask to transfer to another tariff or shop around. You will not be charged any exit fees. Waiting for them (EDF or British Gas) to contact you will be the simplest way to honor domestic consumers’ credit balances with Utility Point/People’s Energy through EDF/British Gas.
Regarding consumers paying by direct debit, Ofgem said: “You don’t want to cancel your direct debit, but you can if you want. EDF/British Gas will contact you to find out if your current Direct Debit will remain in place or if they will set up a new Direct Debit.
Utility Point consumers with smart meters have been informed: “Some consumers with newer smart meter models do not see any loss of smart functionality. Unfortunately, consumers with older smart meter models will see a loss of smart functionality, but their source will continue uninterrupted. EDF will retrofit those old meters for any visitors who request it. Once the delivery to EDF is complete, they will take steps to repair its functionality.
Utility Point consumers with further questions should consult EDF’s website or call 0333 009 7120.
People’s Energy customers stop at the British Gas website or call: 0333 202 1052 (if they have a credit meter, where they pay by month or quarter in arrears) or: 0333 202 9742 (if they have a pay-as-you-go meter). go metro). .
The UK energy market is going through a turbulent era, and this turbulence will inevitably result in higher domestic electricity bills. Here’s a look at what’s happening, how it could happen to you, and what steps you can take. . .
And they’re reaching record levels. Naturally, energy corporations seek to pass on their higher prices to their customers, so that what happens in the wholesale markets affects domestic and commercial customers sooner or later.
How and when you see the effect will depend on the type of electricity rate you have and how your supplier buys their materials in bulk. . .
Ofgem’s cap limits the amount businesses can rate their consumers based on the default rate – around 11 million families in the UK. This cap will increase by approximately 12% on Oct. 1 to allow suppliers to qualify more due to higher wholesale prices.
Unfortunately not. Ofgem has made its calculations based on the evolution of wholesale costs during the summer and what it believes may happen precisely in autumn and winter. It turns out that he underestimated the speed and magnitude of the increases.
The newly calculated limit is based on a fuel value of £63 per therm; In recent days it has risen to £177 per therm, with a 12-month “upfront value” (what you pay if you spend a year buying in advance. ) Up to £135 consistent with Therm.
With electricity, the price corresponds to electricity used through Ofgem £70, but has risen to £181 and has traded at £140 over the last year.
What is certain is that the next revision of the cap in February (which will come into effect in April) will be a further jump, as Ofgem is cautious at this level and will lead to a significant increase.
Some won’t. As you can read in the stories below, four energy providers have gone bankrupt in recent days and more are at risk of doing so in the coming weeks and months.
But as we also explained, no one will run out of supplies. Ofgem’s safety net means that consumers are transferred to some other provider.
The crisis in the domestic market is such that most suppliers have withdrawn most or all of their contracts; they just can’t accept new customers. But we can expect more deals to close in the market once wholesale costs stabilize, as this will most likely happen once the source issues are resolved.
If you have a steady exchange rate and have a few months left, it’s probably more productive to step back and see what the market conditions are as you approach the end of your term.
If your solution is coming to an end, keep checking the market to see if you can find a moderate offer. And reach out to your current provider to see what they can offer you, either in terms of a replacement solution or in terms of your default pricing. As previously stated, default could even become the most productive bet at the moment.
If you’re taking advantage of a variable rate, it’s a matter of looking for competitive deals, whether it’s from the variety of the market or from your current provider.
Two other smaller electricity corporations, People’s Energy and Utility Point, have ceased operations as of today, confirming the crippling effect of the UK’s skyrocketing electricity market. Last week, PFP Energy and MoneyPlus Energy also closed their doors (see below).
Market commentators say emerging prices will lead to more losses among utilities this winter. Here you can find out what happens if your energy provider goes bankrupt.
Market regulator Ofgem advises the approximately 500,000 consumers of People’s Energy and Utility Point to take any action until a new supplier has been appointed. The families involved will suffer any disruption in supply and credit balances will remain in place.
Once the new provider is appointed, consumers will be able to transfer to the provider if they wish.
On its website, People’s Energy said, “We are saddened to inform you that People’s Energy is ceasing operations. Rest assured that your energy source is safe and that the credit balances of all domestic members’ accounts are protected. This includes all recent major increases made as a component of the seasonal weighting initiative.
“Ofgem, the energy regulator, will appoint a new supplier for all our members. Their recommendation is not to change, but to wait for them to appoint a new provider. This will lessen any threat of source disruption and facilitate movement to and from domestic customer credit balances.
Utility Point said, “That’s why we have to announce that Utility Point will cease operations. Customers don’t have to worry, their materials are safe, and their domestic credit balances are protected.
“Ofgem’s recommendation is not to change, but to wait for a new supplier to be appointed and also to do a meter reading in a position where your new supplier contacts you. This will help to ensure that the procedure of moving consumers to a new supplier and paying off domestic consumers’ credit balances goes as smoothly as possible for consumers.
Two of the UK’s smallest energy suppliers, PfP Energy and MoneyPlus Energy, have gone bankrupt. The interests of the approximately 90,000 to 100,000 affected families will be affected through the controlled backstop through the market regulator, Ofgem.
Wholesale fuel and electricity costs are said to be the cause of these slumps. There are fears that other suppliers will close their doors for the winter if fuel shortages in the face of development force costs to rise further.
Green Network Energy, Simplicity Energy and Tonik Energy are among the suppliers that have gone bankrupt in the past 12 months.
When a company finds itself in financial difficulty, its situation is heavily monitored through Ofgem. If shutdown becomes unavoidable, the regulator finds a supplier of choice to take care of the troubled company’s customers, thus maintaining uninterrupted supply.
Customers should take any action as Ofgem works with the appropriate corporations to honour credit balances and manage debt payments.
However, consumers who are transferred to a new provider will end up with a “presumptive” contract that will most likely be costly. It is at this point that they deserve to conduct a comparison of energy price lists to see if they can be transferred to a new supplier. less expensive option, something they can’t do.
You can read more about what happens when an energy supplier goes bankrupt in Rachel’s article.
Evidence of the impact of emerging wholesale stocks came in August, when Ofgem announced a sharp increase in its price cap to allow companies to rate their customers more to the popular “default” variable rate (SVT) due to emerging prices.
The £139 increase will raise the cap to £1277 for a family on a typical income when it comes into force on October 1, its highest point recorded since its introduction in 2019. All primary providers have announced increases in their costs to accommodate the £139 increase. Upper roof (see below).
The cap is replaced twice a year, in April and October. Ofgem is expected to increase it further in April 2022 if wholesale price inflation slows.
You can read more about Ofgem’s value limit here.
Approximately 11 million families benefit from SVT. The main opportunities are non-standard variable rate offers and fixed rate fixed rate offers, in which the value per unit of energy used is fixed for a period of time, 12 or 24 months.
The value of those offerings is also increasing, with some companies offering fixed-value contracts at a higher value than their SVTs. An effective way to find out if you can save money by converting your rate and/or provider is to make a quote. on our site.
The transfer takes 21 days and there is no interruption in supply. Work will be required on your assets if you replace meters as part of the process.
Following the announcement of a 12% increase in the value of its default variable rate (SVT) fee from 1 October, British Gas proposed to freeze SVT customers’ direct debit bills until February 2022.
October is in line with the latest increase in the Ofgem price cap (see below) to £1277 for households with average levels of energy consumption.
British Gas says it will assess the market in February 2022 before making a final decision on converting direct debit invoices to reflect value build-up. He says any buildup will be mitigated in the coming months.
SVT consumers who prefer to start paying the premium value without delay (to increase their spending next year) can replace their direct debit via the British Gas app or by contacting the company.
Ofgem will also announce the next value limit in February, which will come into effect in April. This will influence British Gas’ calculations.
The company claims that its offer to freeze bills could be worth just £50 to consumers who accept it: “Freezing direct debit bills until after winter will leave another £50 in consumers’ pockets. consumers the opportunity to create a little additional monetary relief if they so choose.
August 26, 2021
Bulb is the latest major energy provider to announce a value increase for its Variable Rate Default Rate (SVT) holders.
The move follows the Aug. 6 announcement by market regulator Ofgem that its energy value limit on the default value lists would exceed 12% on Oct. 1.
Regular bulb consumers will pay an extra £2. 90 per week that the new upper limit comes into effect.
Earlier this week, OVO Energy announced a 12. 25% increase in the value of its default Simpler Energy rate, effective October 1, 2021. Customers of OVO-owned SSE Energy Services will see an increase.
Rival primary companies Eon and Scottish Power will also increase their costs by amounts in October. Ebico, Igloo, So Energy, Zebra and Orbit also announced raises.
The new Ofgem cap, which applies to consumers with default SVT tariffs, will increase to £1,277 for families with average income levels, an increase of £139 from the existing level. It is now at its level since its introduction in January 2019.
The series of value increases announced in recent days brings companies’ SVT stock charts to a point near or close to the ceiling. Additional increases are believed to be in the works.
The detail of Ofgem’s price cap, adding the figure for families with a prepaid rate, can be consulted below.
EDF was the first company to react to the price cap announcement last week, revealing its own 12% increase, effective October 1.
British Gas, the UK’s largest supplier, is expected to announce a rise in value for SVT holders in the coming days.
Ofgem has raised the point of the cap to allow companies to qualify further as they face significant increases in wholesale energy and natural gas prices.
Ofgem suggested consumers with SVT’s default tariffs to compare prices to potentially save “hundreds of pounds” by upgrading to a less expensive tariff.
At a glance
Energy giant EDF is the first provider to announce a value increase in line with the recent increase in the official energy value limit managed through regulator Ofgem (see article below).
EDF’s decision, which is expected to be followed by other primary suppliers, will raise the typical charge of its ‘default’ dual-fuel variable tariff to £1,277 (a 12% increase) from October 1. This is the date on which the new Ofgem limit comes into effect.
EDF’s Philippe Commaret said: “We know that the accumulation of value is never welcome, especially in difficult times. In 2020, values for our popular variable consumers fell to an average of £100 per year, and values as soon as “As Ofgem explained, it is global fuel prices that have led to an unprecedented rise in wholesale energy costs and as a long-term sustainable company, we want to reflect the costs we face.
“Customers whose rates are due to be replaced in October will receive a letter reminding them to verify that they are receiving the appropriate rate. “
The regulator raised the cap to £1,277 (its highest point since it was introduced in 2019) so that suppliers can simply rate their consumers more against predetermined price lists to account for the emerging wholesale cost of energy, i. e. natural gas.
Volumes have increased by as much as 50% in the last six months due to cold weather and growing industry-driven demand emerging from Covid-19 lockdowns.
An estimated 11 million families take advantage of providers’ default rates, largely because they have never replaced their rate or because they have not replaced their rate for two years or more and have therefore switched to their provider’s default offering.
Four million more families benefit from high prepayment rates, and the Ofgem limit will also increase on 1 October, from £153 to £1,309.
Ofgem says this combined total of 15 million families can save “hundreds of pounds” on their annual energy costs by buying food and opting for a less expensive deal.
Anyone who switches now would comfortably reap the benefits of their new tariff before October 1 – the procedure for finding a cheaper deal only takes a few minutes and the upgrade itself will be completed in 21 days.
There are no interruptions in supply and there is no need for paint inside or outside your home.
At a glance. . .
Energy market regulator Ofgem announced today that it is extending the cap on popular variable rate default price lists to £139 from 1 October 2021. The 12% increase will bring the cap, which applies to 11 million UK households, to £1,277 – its recorded point.
The prepayment rate cap will increase to £153 on the same day, bringing it to £1,309. Approximately 4 million families will feel the effects of this increase.
Both limits will be reviewed over the winter and the new grades will come into effect in April 2022.
Ofgem imposes a cap to restrict the amount of energy that corporations can rate to their consumers based on predetermined and prepaid tariffs, however, it has increased this point due to skyrocketing wholesale energy market prices, which has increased wholesale fuel prices by 50%.
The limits indicated apply to families with average annual consumption. When families take advantage of default rates, it’s because they’ve never substituted provider or rate, or because they haven’t replaced for two years or more.
Many other people who live in rented housing and have modest incomes take advantage of prepaid meter rates.
Ofgem’s cap does not limit the amount of expenses but the amount the electric company can charge for each unit of fuel and electricity used, plus the current tariffs. Expenses differ depending on the point of consumption of each household.
Substantial savings can be achieved through those who transfer from a predetermined variable-rate tariff to a competitive constant or variable-rate arrangement (£477 is the minimum savings of the richest 10% of savers who transferred fuel and electric power through Comparison Technologies, Forbes. Power comparison partner of the advisor, between January 1, 2020 and December 31, 2020).
There are also competitive prepayment rates for those who wish to switch.
Ofgem commented: “Customers can improve this by making purchases or asking their supplier to offer them a better deal. “
Those who take advantage of predetermined price lists and prepayment now have just under two months to transfer to an energy provider or transfer to a less expensive rate with their current provider. The good news is that the change takes 21 days and there is no interruption. at origin or in search of paintings on your property, internal or external. Creating a quote only takes a few minutes with our comparison service.
Jonathan Brearley, director of energy market regulator Ofgem, says the energy price cap could soar to £150 from 1 October 2021. The actual increase will be announced on Friday, August 6, 2021.
The rate cap applies to the “default” variable rate rates and limits the amount that energy providers can rate for fuel and electric power pools, as well as the current rates related to the rate. Currently, it amounts to £1,138 per year for a typical family with average consumption.
An estimated 11 million families benefit from default rates, either because they have never changed providers or because they have adopted a predetermined arrangement through their provider following the completion of a previous agreement.
There is a limit to the 4 million families with prepaid meters: £1,156 a year.
Most providers set their rates to the maximum allowed by the cap. As the annual figure is a limit on the unit price lists and not on the number of bills, the amount to be paid will depend on the amount of energy used.
Brearley says the cap will be enforced because the global costs of fossil fuels, specifically gas, are rising at an unprecedented rate. Ofgem will allow suppliers to rate higher costs as they pay more in wholesale markets.
“Unfortunately, rising wholesale prices will affect the price cap and while the final investigation is not complete and other prices will also be the overall point, it could go up by around £150 per unit to the next price point. limit value. Said.
Ofgem announces in advance the price cap update to allow those involved to move to a cheaper offer. The regulator is actively promoting the upgrade, noting that there are many cheaper price lists available for those with predetermined arrangements. Lists of fixed-rate and fixed-term securities that lock in unit value for 12 or 24 months.
Brearley added: “Although the value of those constant contracts is also increasing due to emerging wholesale energy prices, if you compare prices, you may still save a lot of euros on your energy bill. “
Switching now would mean keeping current rates steady in anticipation of the expected rise in wholesale costs in the fall.
As we reported last week, the government is introducing an automatic replacement for those who take advantage of the default tariffs, unless they opt out of the process.
However, this would not be implemented until 2024, leaving default consumers vulnerable to peak energy prices for the next 3 years unless they decide to transfer suppliers.