Tag: Ofgem

Record gas prices drive up price cap by £139

Customers encouraged to contact supplier for support and switch to better deal if possible

  • Support available for customers struggling to pay bills or in vulnerable circumstances with additional help for those on prepayment meters
  • Energy suppliers sign up to industry commitment to reach out to those who most need help this winter
  • Customers can avoid the increase by shopping around or asking their supplier to put them on a better deal

The energy price cap will increase from 1 October for the 15 million customers it protects. Those on default tariffs paying by direct debit will see an increase of £139 from £1,138 to £1277. Prepayment customers will see an increase of £153 from £1,156 to £1309. 

This increase is driven by a rise of over 50% in energy costs over the last six months with gas prices hitting a record high as the world emerges from lockdown.

Surging global fossil fuel prices are already driving up inflation for consumers, making fixed rate energy tariffs not covered by the price cap, as well as petrol and diesel more expensive.

The price cap offers a safety net for customers who haven’t switched by making sure that suppliers only pass on legitimate costs.

Those on default tariffs are saving an estimated £75-£100 or £1 billion every year as a result.

Any customer in vulnerable circumstances or worried about paying their energy bill should contact their supplier to access the support available.

Customers may be eligible for extra help such as affordable debt repayment plans or payment breaks, emergency credit for prepayment meters and a £140 bill rebate under the Warm Home Discount.

Last week suppliers also signed up to an industry commitment to reach out to those who most need help this winter.

Customers can also shop around to save money before the increase takes effect on 1 October.

Those who don’t want to switch supplier or are unable to can ask their supplier to put them on a better deal.

Jonathan Brearley, chief executive of Ofgem, said: “Higher energy bills are never welcome and the timing and size of this increase will be particularly difficult for many families still struggling with the impact of the pandemic.

“The price cap means suppliers only pass on legitimate costs of supplying energy and cannot charge more than the level of the price cap, although they can charge less.  

“If you’re struggling to pay your bill you can get in touch with your supplier to access the help that’s available and if possible, shop around for a better deal.

“We have put tough rules in place to ensure suppliers treat customers who are struggling with bills fairly, and welcome their commitment to reach out to those who most need help this winter. Where help is not forthcoming, we will not hesitate to act.

“I appreciate this is extremely difficult news for many people, my commitment to customers is that Ofgem will continue to do everything we can to ensure they are protected this winter, especially those in vulnerable circumstances.”

Ofgem adjusts the price cap twice a year based on the latest estimated costs of supplying energy.

The biggest and most unpredictable factor is the wholesale cost of electricity and gas paid by suppliers and influenced by global markets. This accounts for roughly 40% of the overall price cap level.

Gas prices have risen to a record high in Europe due to a recovery in global demand and tighter supplies. This is increasing the cost of heating homes and pushing up electricity prices.

Last winter, the level of the cap fell by £84 after passing onto customers the savings from lower wholesale energy costs as countries went into lockdown and demand fell.

How to keep heating costs down at end of energy price-cap

With the combination of more people working from home and the current colder temperatures, heating bills for most people across the UK are rocketing.

Energy bills will rise further for millions more after the regulator, Ofgem, lifted the price cap on standard tariffs back to pre-pandemic levels but there are lots of simple things you can do to keep cosy and reduce your fuel bills during the current chilly period.

Here are some top tips from NHBC, the UK’s leading warranty and insurance provider for new build homes, to help you save on your winter bills:

·       Reduce draughts – an important job as winter approaches is to make sure that your house does not have any unintended draughts. Floorboards and skirtings usually go ignored but cold air can easily filter through, so check for gaps and fill them in. Check to see if your letterbox is draughty, which can lead to cold hallways – installing a letter box draught excluder that fits onto the inside of your front door is an inexpensive easy DIY job. If you have an open fireplace and chimney which is not used, this can be draught proofed to stop warm air escaping and cold air entering your property. Remember that openings for ventilation should not be blocked.

·       Bleed your radiators – trapped air or gas prevents hot water from heating your radiators fully so, if you have a radiator that is warm at the bottom but cool at the top, this may well mean there is air in the system, which may require bleeding to ensure maximum efficiency of the heating system.

·       Loft insulation – insulating your loft is a simple, inexpensive and effective way to reduce energy waste and lower your heating bills. All new houses are fitted with loft insulation that meets the latest building regulations but, if you are in an older property, you may want to think about renewing it or topping it up.

·       Thick curtains – they can help to protect your home from losing heat through windows. It’s important to try to get as much sunlight into your home during the day as possible but, as soon as dusk falls, remember to close curtains to reduce the need for additional heating.

·       Keep radiators free – a common mistake we often make is to place our sofas in front of the radiators which can absorb the heat.

·       Cavity wall insulation – around a third of all the heat lost in an uninsulated home escapes through walls so, if you live in an older property, considering thermal insulation of cavity walls could save you lots of money.

·       Loft hatches – energy loss through the loft hatch is often overlooked. Insulating the hatch and ensuring that an effective draught seal is in place will help to keep heat energy in and your home warm.

·       Windows – energy-efficient glazing keeps your home warmer, allowing less heat to be lost. Double glazing is fitted as standard to new-build homes but, if your house is older, replacing windows could be a good investment as they help to keep warmth in and reduce external noise.

·       Service your heating system – all central heating boilers should be serviced and safety checked at least once a year by a Gas Safe Registered engineer. If your boiler is old, then consider an upgrade. According to the Energy Saving Trust, a new A-rated condensing boiler can save up to £315 a year on heating bills – most new homes have this type of boiler.

·       Room temperature controls – your thermostat should typically be set between 18°C and 21°C, but by installing thermostatic radiator valves you can set different temperatures in different rooms (turn down the radiators in unoccupied rooms), according to individual preference. These will be standard in new homes but are easily fitted to existing radiators.

·       Floor insulation – insulating your ground floor or floors above any unheated spaces e.g. integral garages will assist in keeping your home warm.

·       Insulating tanks, pipes and radiators – Lagging water tanks and pipes and insulating behind radiators reduces the amount of heat lost, so you spend less money heating water up, and hot water stays hotter for longer.

Standards and Policy Manager at NHBC Giles Willson, said: “People living in new homes typically benefit from lower energy bills because their properties are built in line with the latest Government regulations for energy efficiency.

“However, whether you live in a newly-built home or an older property, there are a lot of ways that could save money on utility bills during the coldest part of the year when many millions of us are also working from the kitchen table and home-schooling our children.”

11 million households to make savings as government extends cap on energy bills

*Energy Price Cap extended until end of 2021, protecting around 11 million UK households from being overcharged

*households on standard variable and default energy tariffs will continue to save between £75 and £100 a year on dual fuel bills

*2.8 million electricity and 2.1 million gas customers switched supplier in the first six months of 2020

Around 11 million households across the UK will be protected from being overcharged on their energy bills thanks to an extension to the government’s Energy Price Cap until the end of next year.

The Energy Price Cap shields those least likely to shop around for the best deals – including the elderly and most vulnerable – from being charged excessive prices.

Since its introduction in January 2019, the cap has saved customers around £1 billion a year, equivalent to around £75-100 a year for typical households on default energy tariffs.

An additional 4 million households with prepayment meters on default tariffs will also come under the protection of the cap from January.

Business and Energy Secretary Alok Sharma said: The Energy Price Cap has been vital in ensuring customers do not pay too much on their bills, which is why we are keeping it in place for at least another year.

“Switching energy supplier to find the best value deals is still the best way to save on bills, but this government is determined to make sure all customers are treated fairly and get the protection they deserve.”

In addition to the price cap, millions of customers have been able to benefit from lower bills as the numbers of those switching to cheaper tariffs has increased and the rollout of smart meters has progressed in recent years.

A total of 2.8 million electricity and 2.1 million gas customers switched supplier in the first 6 months of 2020, building on record numbers of households switching to cheaper tariffs in 2019, the first full year of the Energy Price Cap.

However, more than half of customers are still on standard variable or default tariffs, where, in the absence of the cap, they would likely still be paying excessive charges for energy use.

In August, the independent energy regulator, Ofgem, recommended an extension to the cap following a review into the market. Today’s announcement follows that recommendation.

The Energy Price Cap extension is the latest government measure to help vulnerable customers with their energy bills and follows particular support during the coronavirus pandemic.

Energy suppliers have given prepayment and pay-as-you-go customers support when they faced financial distress.

Those with prepayment meters have also benefited from a price cap that is in place until the end of the year.

Today’s announcement means a further 4 million households with prepayment meters on default tariffs will continue to be protected from excessive prices by the wider Energy Price Cap once the Competition and Market Authority’s Prepayment Meter Cap expires at the end of 2020.

Jonathan Brearley, Chief Executive of Ofgem, said: The Secretary of State’s announcement means that 15 million households will continue to be protected under the price cap and will pay a fair price for their energy in 2021.

“Although those protected by the cap are paying a fair price, they can also reduce their energy bills further by shopping around for a better deal.

“Ofgem will continue to protect consumers in the difficult months ahead as we work with industry and government to build a greener, fairer energy system.”

Natalie Hitchins, Head of Home Products and Services at Which?, said: “With energy bills expected to rise and tighter coronavirus restrictions returning to many parts of the country, it is good to see the regulator taking steps to protect vulnerable customers and ensure they can stay warm this winter.

“Anyone facing financial difficulty or struggling to pay their energy bills should speak to their provider about what support may be available to them. Households could also potentially save themselves hundreds of pounds a year by switching to a provider offering a cheaper deal and possibly better customer service.”

Customers looking for cheaper energy deals can compare deals with Which? Switch, a transparent and impartial way to compare energy tariffs and find the best gas and electricity supplier for you.

Which? calculates that a medium user (using 12,000kWh gas and 2,900kWh electricity per year) on a dual-fuel default tariff at the level of the current price cap could save up to £221 by switching to the cheapest deal on the market. Based on widely-available tariffs available across England, Scotland and Wales, paying by monthly direct debit, with paperless bills. Data is from Energylinx and correct on 13 October 2020.

Ofgem steps in as Our Power ceases trading

Our Power, the housing association-backed energy supplier, has ceased to trade. It’s understood Our Power has around 31,000 domestic customers.

Company directors blame volatile energy markets for the firms collapse, which will result in seventy job losses.

In a statement, Our Power directors said: “It is with heartfelt regret that Our Power board of directors has taken the decision to close by taking the company into administration.

“Directors had no choice but to reach this decision as the requirement to bring working capital into the business outpaced our ability to improve revenue collection and raise funds.

“The leadership team and directors have done their utmost to try to find a solution but have been unable to and reluctantly took the decision to close the business.”

Under Ofgem’s safety net, the energy supply of Our Power’s customers will continue and pre payment meters can be topped up as normal. The outstanding credit balances of domestic customers will be protected.

Ofgem will choose a new supplier to take on Our Power’s customers as quickly as possible. This supplier will contact these customers shortly after being appointed.

Ofgem’s advice to Our Power’s customers in the meantime is:

  • Do not switch to another energy supplier.
  • Take a meter reading ready for when your new supplier contacts you.

This will make the process of transferring customers over to the chosen supplier, and paying back their outstanding credit balances, as smooth as possible.

Philippa Pickford, Ofgem’s director for future retail markets, said: “Our message to energy customers with Our Power is there is no need to worry, as under our safety net we will make sure your energy supplies are secure and your credit balance is protected.”

“Ofgem will now choose a new supplier for you, ensuring you get the best deal possible. Whilst we’re doing this our advice is to ‘sit tight’ and don’t switch. You can rely on your energy supply as normal. We will update you when we have chosen a new supplier, who will then get in touch about your new tariff.”

“We have seen a number of supplier failures over the last year and our safety net procedures are working as they should to protect customers.”

Updates are available from our website or through our twitter feed @ofgem.

Customers who have questions should visit the FAQs on our website. Or if they need additional support, call Citizens Advice on 03454 04 05 06 or email them via their webform. Alternatively, get in touch through Ofgem’s facebook or twitter feed @ofgem.

Port of Leith Housing Association has issued this advice to their tenants:

Important notice for Our Power Energy customers

We have been informed that Our Power Energy Supply Ltd has gone into administration. The energy regulator Ofgem will select a new supplier to take over any customer accounts held by Our Power.

If you are a customer of Our Power your energy supply will continue as normal and any credit you have will be transferred to the new supplier. If you have a meter, you should continue to top it up as usual.

You should hear from your new supplier soon.

In the meantime, you can find guidance from the regulator here: https://www.ofgem.gov.uk/…/ofgem-safety-net-if-your-energy-…