Citizens Advice Calls For Extra Help For Struggling Customers

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10 April: Steep Rise In Legal Action Over Unpaid Bills

Citizens Advice has issued a warning about growing ranges of court docket motion being taken in opposition to people who find themselves behind on their vitality payments.

The variety of clients the charity helps with county court docket judgments (CCJs) issued on behalf of vitality corporations is growing. Between 2020 and 2022 Citizens Advice noticed a 30% improve within the variety of individuals affected, however final yr that quantity practically doubled, leaping from 179 in 2022 to 349 in 2023.

The charity is anxious this might pressure invoice payers additional into debt, since CCJs can go away individuals paying greater charges of curiosity on borrowing.

Madison Stefanuik, a debt caseworker at Citizens Advice, mentioned: “People are coming to us about this downside an increasing number of usually. It’s normally people who find themselves struggling to make ends meet, usually attempting to prioritise lease and council tax. As a end result, they’ve fallen behind on vitality payments and have been hit with a CCJ.

“Since guidelines have been tightened on prepayment meters, we’ve observed some vitality suppliers are more and more utilizing CCJs and sending in bailiffs to pressure clients to pay their money owed.

“What’s troubling is that energy debts aren’t regulated by the Consumer Credit Act, meaning suppliers can go to the High Court quite quickly after a CCJ has been granted – at which point bailiffs can get involved. This is when people usually come to us for help, because they’ve got aggressive bailiffs knocking at the door and don’t know what to do.”

Dame Clare Moriarty, Citizens Advice chief govt, mentioned: “Getting a CCJ can be devastating. It can ruin people’s finances and plunge them further into debt. That’s why Ofgem must introduce new permanent protections to halt this worrying trend as soon as possible.”

The latest evaluation from Ofgem reveals vitality debt rose by £2.8 million a day within the final six months of 2023, reaching a report determine of £3.1 billion.

Citizens Advice is looking for a long-term plan to deal with spiralling vitality debt, together with new protections for people who find themselves in debt to their provider. Currently, there aren’t any guidelines on when it’s acceptable for suppliers to make use of CCJs.

4 April: Vulnerable Customers To Receive Compensation

Energy suppliers predict to pay over £540,000 in compensation to 2,500 ‘vulnerable’ clients who have been wrongly moved onto prepayment meters, in line with information from the business watchdog Ofgem, writes Brean Horne.

The regulator ordered suppliers to overview circumstances the place prepayment meters have been involuntarily fitted between 1 January 2022 and 31 January 2023 to establish clients eligible for compensation due to their vulnerable standing, as outlined by Ofgem.

So far, suppliers have paid £342,450 in compensation to 1,502 clients, with £200,000 to be paid to an additional 1,000. Compensation ranges for every buyer fluctuate relying on their circumstances and the hurt they skilled.

Involuntary becoming of prepayment meters is allowed the place the client is closely in debt with their credit score meter account and reveals no indicators of paying, except the family is deemed vulnerable below Ofgem’s definition (see under).

Last yr a report in The Times revealed that clients have been being pressured to just accept a prepayment meter regardless of their being classed as vulnerable. As a end result, involuntary set up was paused by Ofgem whereas an investigation took place. It restarted earlier this yr, with solely a restricted variety of suppliers allowed to hold it out.

Currently, these are E.ON, EDF, Octopus, Scottish Power, Tru Energy, Utilita and Utility Warehouse.

The compensation figures for British Gas usually are not included as a result of the vitality agency – Britain’s greatest, with seven million clients – is being investigated individually by Ofgem.

Energy suppliers are figuring out affected clients by trying on the accounts of individuals with recognized vulnerabilities, or the place complaints have been made. They have additionally contacted all prepayment meter clients to examine whether or not it’s nonetheless an acceptable means for them to pay.

A spokesperson for Ofgem mentioned: “We are working closely with suppliers to make sure they identify all eligible consumers and pay appropriate levels of compensation promptly.”

The information follows the publication of Ofgem’s ‘multiyear’ technique – ‘Protect, Build, Change, Deliver’ – which units out the way it intends to ship “clean, secure and fairly-priced” vitality.

The strategy is designed to assist clients cope with the monetary influence of the 2022 vitality disaster, which noticed debt ranges attain report highs. Ofgem additionally goals to attain a internet zero vitality system and transition from gasoline to renewable vitality sources as a part of its plans.

Claiming compensation

You could also be eligible for compensation in case your vitality firm wrongfully put in a prepayment meter or switched you from a sensible meter to prepayment meter mode.

If you assume you will have been affected, contact your vitality provider to elucidate your circumstances and make a criticism. Your provider will examine your case and your criticism could also be referred to the Energy Ombudsman and Extra Help Unit if you happen to want further assist.

What are the prepayment meter guidelines?

Suppliers should be permitted by Ofgem and observe strict guidelines earlier than they’ll set up a prepayment meter and not using a buyer’s permission.

This contains making no less than 10 makes an attempt to contact the client about their vitality invoice arrears and conducting a welfare go to earlier than the prepayment meter is put in.

Under present guidelines, suppliers should shield vulnerable clients and usually are not allowed to force-fit prepayment meters in households with:

residents over 75 (except they’ve sufficient assist in the home)
youngsters below the age of two

residents with extreme well being points, terminal diseases or circumstances that would worsen in chilly temperatures (akin to power bronchitis, emphysema and sickle cell illness)
residents needing a steady vitality provide for different well being causes (akin to dependence on powered medical tools).

The checklist of permitted suppliers is topic to vary however clients can examine whether or not a agency is authorised to force-fit a prepayment meter on Ofgem’s website.

If you might be frightened about affording your vitality payments, it’s necessary to contact your provider as quickly as doable. Our information on how one can get assist together with your vitality payments additionally shares extra assist available to help with preserving on prime of your vitality payments.

1 April: 12% Cap Cut Thanks To Falling Wholesale Prices

Today, 1 April 2024, sees the vitality market’s home invoice value cap fall by 12.3%, taking it from £1,928 to £1,690. This is the quantity a median family can anticipate to pay in a yr if they’ve a twin gas gasoline and electrical energy tariff and pay by direct debit or have a prepayment meter.

Households utilizing common quantities of vitality ought to see their payments fall by round £20 a month. However, the beginning of April additionally sees hefty will increase in council tax, water payments, broadband and cell phone tariffs, and car excise obligation for many vehicles, lowering the web profit in lots of cases.

The vitality cap, which re-sets each three months based mostly on historic wholesale costs monitored by Ofgem, the regulator, doesn’t restrict the scale of precise payments. It is a cap on how a lot suppliers can cost for models of gasoline and electrical energy consumed and related standing expenses.

Typical consumption charges for a median family – 11,500 kWh per yr of gasoline and a pair of,700 kWh per yr of electrical energy – are used to work out the cap quantity.

Most individuals are on vitality tariffs that mirror the cap’s limits on the value per unit of vitality and on standing expenses, however there are a small variety of cheaper offers the place the value is fastened, normally for 12 months. You can run a fast comparability to see what’s available right here.

These fixed-rate tariffs normally include an exit price if you happen to want to transfer tariff earlier than the tip of the fastened interval. These begin at round £50 per gas however might be a lot greater, so are price contemplating if you happen to assume there’s a chance you would possibly need to change within the close to future if the cap falls additional (notice that exit charges can’t be charged if you’re inside 42 days of the tariff finish date).

Market analyst Cornwall Insight predicts that the value cap will fall once more from £1,690 to £1,560 on 1 July earlier than rising to £1,631 on 1 October. Its estimate for the primary quarter of 2025 is £1,634, however it’s usually agreed that predictions additional into the long run are inherently much less dependable due to the vulnerability of wholesale costs to world occasions and weather-driven demand.

In the winter of 2021-22, the value cap was under £1,300, so even with at this time’s, it stays at an elevated stage in historic phrases. The regulator, Ofgem, has opened a session on the way forward for pricing regulation, having concluded that the present association won’t work effectively as new tariffs emerge with variable pricing constructions based mostly on provide and demand (see story under).

26 March: Ofgem Consults On Future Of Price Cap

Market regulator Ofgem is consulting on the way forward for its value cap, which limits how a lot suppliers can cost clients for every unit of gasoline and electrical energy they use, in addition to for related standing expenses.

The cap is ready quarterly. At current it stands at £1,928 however from 1 April 2024 it is going to fall by 12.3% to £1,690. This is the quantity a median family can anticipate to pay in a yr if they’ve a twin gas gasoline and electrical energy tariff and pay by direct debit.

Actual payments are at all times decided by consumption – the cap doesn’t restrict how a lot you’ll pay. It is decided by actions in wholesale vitality costs within the three months earlier than it comes into pressure.

Ofgem says the cap, which was launched in 2019, has helped shield clients from the worst results of the spike in vitality costs that adopted the Russian invasion of Ukraine. But critics level out that the federal government stepped in to restrict typical payments to £2,500 a yr when the cap soared above £3,000 in October 2022 and £4,200 in January 2023.

The session, which runs till 6 May, will discover methods by which the cap is likely to be developed “so customers remain protected as the energy market evolves to a smarter, more flexible system.”

This refers back to the introduction of ‘time of use’ tariffs that supply electrical energy at totally different costs throughout the day, permitting shoppers to make use of home equipment and units when common ranges of demand are low and unit costs are cheaper.

Tariffs designed to cater for the growing variety of households charging their electrical vehicles in a single day are additionally beginning to seem.

Ofgem mentioned: “Energy markets are altering as growing numbers of shoppers change their vitality consumption and begin utilizing electrical autos, warmth pumps and photo voltaic panels.

“Our more and more renewables-dominated electrical energy sector can even reward shoppers for shifting the time of their electrical energy consumption, which is able to in flip scale back prices for everybody.

“As customer diversity grows, and more households adopt time-of-use tariffs, it could become harder to retain a universal price cap that is suitable for everyone. [We are] considering how the price cap, and energy regulation as a whole, needs to adjust to ensure customers are protected, they continue to pay a fair price for their energy, and they get to realise all the benefits of net zero.”

As a part of session dialogue paper, Ofgem has set out a variety of choices for the way forward for the value cap, together with:

introducing a extra dynamic cap with time-of-use dependent unit charges to encourage client flexibility

introducing a focused cap which might be based mostly on quite a lot of elements akin to vulnerability
introducing extra versatile, market-based value protections akin to setting a restrict between a provider’s default tariff and tariffs available available in the market, capping the margin suppliers are in a position to make, or changing the cap with a ban on acquisition-only tariffs.

Acquisition-only tariffs are offers which might be solely available to new clients. There is presently a short lived ban on such presents, just lately prolonged for 12 months, which was launched to stop suppliers from subsidising such offers with income from current clients.

Ofgem can be presently reviewing over 30,000 responses to its call for input on standing charges, which closed in January.

Responses to the value cap session might be despatched to [email protected] by Monday 6 May 2024.

23 February: Regulator Working On Plans To Tackle Debt

Ofgem, the vitality market regulator, is lowering its value cap on the cost of gasoline and electrical energy by over 12% from 1 April, a transfer which is able to knock £238 a yr off typical payments, writes Kevin Pratt.

The cap limits what suppliers can cost for every unit of energy they provide and for related standing expenses. For a median family with a ‘dual fuel’ gasoline and electrical energy tariff paying by direct debit, the cap will work out at £1,690 when it’s modified in the beginning of the following quarter.

This is a 12.3% fall on the present cap of £1,928.

The estimated 4 million clients with prepayment meters can be topic to the identical stage of cap, as Ofgem is completely eradicating the ‘premium’ that has beforehand been added to their payments.

Those who pay on receipt of their invoice by cheque or money will proceed to pay round 5% extra for his or her vitality due to the administration prices concerned.

The cap, which is up to date each quarter, doesn’t restrict the scale of payments, that are at all times decided by consumption. The cap’s assumed ‘average consumption’ figures are 11,500 kWh per yr of gasoline and a pair of,700 kWh per yr of electrical energy.

Ofgem says the change in April will see vitality costs attain their lowest stage since Russia’s invasion of Ukraine in February 2022, which helped push wholesale costs for gasoline and electrical energy to report ranges. Domestic costs adopted go well with, prompting the federal government to intervene in October of that yr with its Energy Price Guarantee.

This capped payments at a median of £2,500 a yr. Government funds totalling £400 have been then paid to households over the winter of 2022/23 to subsidise payments additional.

The value cap was as little as £1,300 as just lately as early 2021. Ofgem concedes that clients are fighting the excessive cost of payments, pointing to report client vitality debt ranges of £3.1 billion.

The new cap features a cost of £28 per family, unfold throughout a yr, to allow suppliers to write-off unrecoverable debt. Those on prepay meters won’t be charged this sum as a result of, because of the nature of their cost technique, debt ranges usually are not as power as for credit score meter clients.

Jonathan Brearley, Ofgem’s chief govt, says the regulator is engaged on measures to handle ranges of current debt: “We’ll be stepping again to have a look at points surrounding debt and affordability throughout the marketplace for struggling shoppers, which we’ll be saying quickly.

“These steps spotlight the constraints of the present system – we will solely transfer prices round – so we welcome information that the federal government is opening the dialog on the way forward for value regulation, looking for views on how normal vitality offers might be made extra versatile so clients pay much less if utilizing electrical energy when costs are decrease.

“But longer term we need to think about what more can be done for those who simply cannot afford to pay their energy bills even as prices fall. As we return to something closer to normality we have an opportunity to reset and reframe the energy market to make sure it’s ready to protect customers if prices rise again.”

Ofgem says it’s encouraging the return of switching tariff, the place clients transfer to a extra aggressive deal, by lowering the time it takes to change to 5 days. It can be eradicating the ‘market stabilisation charge’, which requires firms to pay compensation to a brand new buyer’s earlier provider once they change.

However, the regulator has prolonged its ban on ‘acquisition-only’ tariffs by 12 months, a transfer which is being seen as a possible barrier to competitors.

These tariffs allow firms to supply offers solely to new, not current, clients. They have been banned due to fears that aggressive pricing in periods of wholesale value uncertainly might put firms’ monetary stability in danger if wholesale costs moved in opposition to them.

Ofgem says it determined in opposition to eradicating the market stabilisation cost and the ban on acquisition-only tariffs as a result of to do each concurrently would possibly jeopardise “a phased and responsible return towards normality in the market.”

It says it desires to stop “a return of the risky behaviours which contributed to the high number of supplier failures during the energy crisis.”

15 December: Ofgem Proposes £16 Price Cap Adjustment To Help Struggling Customers

The vitality value cap will incorporate a £16 ‘adjustment’ for the yr April 2024 – March 2025 if proposals put ahead by the regulator to deal with unhealthy debt are given the inexperienced mild.

The quantity – equal to round £1.33 a month for credit score meter billpayers – could be utilized by suppliers to fund a variety of client assist measures launched by Ofgem.

These took impact yesterday (14 December) having been introduced on 18 October (see story under). They embrace serving to clients who’re in debt by:

establishing cost plans

writing off unmanageable debt on a case-by-case foundation
understanding reasonably priced reimbursement holidays.

Ofgem argues that present ranges of debt – estimated at £3 billion – pose a threat to provider viability. If firms have been to fail, extra prices could be heaped on shoppers because the market absorbed ‘orphaned’ clients whose provider had gone bust.

The cost of allocating clients of round 30 failed corporations throughout the vitality disaster triggered by the warfare in Ukraine in February 2021 is reckoned to be round £6 billion kilos.

In Ofgem’s phrases, ‘bad debt’ refers back to the quantity of money owed by clients throughout the vitality market which is unlikely to be repaid. The regulator says the adjustment to the value cap is essential to make sure that the burden of this elevated debt falls as pretty as doable.

It mentioned: “The scale of this debt implies that it’s essential that suppliers have ample funding to make sure they’ll meet the strict laws Ofgem has in place round how they deal with clients going through cost difficulties. This adjustment to the value cap will guarantee suppliers have the assets to assist clients fighting debt.

“Other sectors already commonly make provisions within their prices for bad debt costs. However, the regulated nature of the energy sector means that Ofgem is able to use the price cap mechanism to ensure these costs are recovered as fairly and efficiently as possible.”

Under Ofgem’s proposals, any further prices added to the value cap wouldn’t be handed onto clients with prepayment meters.

This displays the truth that many of those clients don’t build up the identical stage of debt as credit score clients (who pay in arrears) as a result of prepay meters work on a ‘pay-as-you-use’ foundation.The session runs till 17 January 2024. Details, together with how one can reply, might be discovered on the Ofgem website.

23 November: Ofgem Proposes To Make Market ‘Fairer’

Ofgem, the vitality market regulator, is growing its value cap on home buyer payments by 5% from 1 January 2024, efficient for the primary quarter of the yr. The latest figures from the Office for National Statistics present inflation operating at 4.6% in October.

For a median family paying by direct debit for a twin gas tariff (gasoline and electrical energy from the identical provider), this implies an increase of £94 in annual payments from £1,834 to £1,928.

For clients who pay by normal credit score on receipt of a invoice (money or cheque), the default cap will improve by £99 from £1,959 to £2,058 for typical twin gas consumption, whereas the cap for prepay clients will elevated by £99 from £1,861 to £1,960, once more for common twin gas consumption.

Ofgem says the rise “is driven almost entirely by rising costs in the international wholesale energy market due to market instability and global events, particularly the conflict in Ukraine.”

It says it is going to use “all levers” to make sure prices are unfold pretty and clients fighting payments are supported.

‘Average consumption’ is deemed to be 11,500 kWh per yr of gasoline and a pair of,700 kWh per yr of electrical energy. Ofgem’s cap doesn’t put a ceiling on payments, which is able to at all times be decided by the quantity of vitality consumed.

The value cap is up to date each quarter and limits how a lot clients might be charged per unit of vitality and in standing expenses.

Earlier this month, Ofgem opened a session into probably changing or overhauling standing expenses, that are paid no matter consumption and are seen by many as a disincentive to lowering consumption (this runs till 19 January – see story under for particulars on how one can submit your views).

Ofgem boss Jonathan Brearley mentioned: “This is a troublesome time for many individuals, and any improve in payments can be worrying. But this rise – across the ranges we noticed in August – is a results of the wholesale cost of gasoline and electrical energy rising, which must be mirrored within the value that all of us pay.

“It is necessary that clients are supported and we’ve made clear to suppliers that we anticipate them to establish and supply assist to those that are fighting payments.

“We are additionally seeing the return of option to the market, which is a optimistic signal and clients may benefit from purchasing round with a variety of tariffs now available providing the safety of a set charge or a extra versatile deal that tracks under the value cap.

“People should weigh up all the information, seek independent advice from trusted sources and consider what is most important for them whether that’s the lowest price or the security of a fixed deal.”

Today’s announcement confirms plans to take away the ‘prepayment meter premium’ to make sure that prepay clients are charged the identical standing cost as direct debit clients.

Previously, clients with prepay meters have been charged extra to cowl extra prices.

In addition to its proposal to take away the prepay premium completely as soon as authorities subsidies are eliminated in April, Ofgem additionally desires to overtake the way in which the prices of unhealthy debt are shared amongst normal credit score clients (those that pay on receipt of a month-to-month or quarterly invoice for the precise quantity of vitality used) and those that pay by direct debit.

If adopted within the spherical, the proposals would save pre-pay clients round £50 a yr, scale back normal credit score payments by round £45 a yr however add round £20 a yr for direct debit clients.

Ofgem is eager to listen to views on this proposal from all events.

The value cap to take impact in April can be introduced in February. Analyst Cornwall Insight is predicting that the principle cap will fall again to round £1,850 at that time.

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16 November: Bills Tipped To Increase From January

Ofgem, the vitality market regulator, desires to know what individuals take into consideration standing expenses, and the way they is likely to be changed, writes Mark Hooson.

Energy clients pay standing expenses at a every day charge to their suppliers as a part of their payments, no matter how a lot gasoline or electrical energy they use. Critics say this may act as a disincentive to slicing consumption.

Under the present vitality value cap, clients might be charged as much as 53 pence per day standing cost for electrical energy, and 30 pence per day for gasoline. A brand new cap can be introduced within the coming days to take impact from 1 January 2024.

Analyst Cornwall Insight is predicting that the vitality value cap – presently £1,834 ayear for a typical family paying by direct debit – will rise by 5% to £1,931 on 1 January 2024. It says the determine can be £1,853 for the second quarter of the yr, £1,824 for Q3 and £1,863 for This fall.

It is forecasting a steep improve within the electrical energy standing cost from April – as much as 61 pence per day from 53 pence – on account of a reform of community expenses by Ofgem.

Standing expenses might be likened to line rental on a telephone contract. Suppliers spend the earnings they generate on sustaining the infrastructure they use to ship vitality.

Last month, figures from the Office for National Statistics confirmed round 4 in 10 adults (39%) who pay vitality payments mentioned it was ‘very or somewhat difficult’ to afford them.

Today, 16 November, vitality regulator Ofgem is asking charities, client teams, businesses, suppliers and invoice payers for his or her views on standing expenses, and desires concepts for what they is likely to be changed with.

Any events, together with invoice payers, can e-mail their views to: [email protected] by Friday 19 January, 2024.

Tim Jarvis, Ofgem’s director for markets, mentioned: “We know that standing charges have provoked a huge amount of debate in recent months and, with wider cost of living pressures meaning customers will continue to struggle with bills, now is the right time to look at this again.”

Standing expenses are coated by the vitality value cap, which limits how excessive suppliers can set them, however many nonetheless see them as unfair.

Standing expenses fluctuate by area, with these on Merseyside and in north Wales paying greater than these within the south east of England. Energy clients on pre-pay meters have additionally traditionally paid extra in standing expenses than direct debit invoice payers.

Pre-pay clients are presently subsidised by way of the federal government’s Energy Price Guarantee, however that assist is because of finish in March 2024. Ofgem says it’s engaged on a substitute for the scheme.

While most suppliers do levy standing expenses, they’re not obliged to. The few that don’t have standing expenses, akin to Utilita, as a substitute add the cost to the unit costs of the vitality they provide.

On the one hand this implies clients solely pay for what they use, however greater unit prices would possibly drawback clients who can not scale back their vitality consumption, akin to these with disabilities, the elderly and people depending on medical tools.

Mr Jarvis mentioned: “It’s a fancy difficulty and, whereas an upfront set price to cowl a provider’s fastened prices works for some, it doesn’t work for others. Equally, spreading the prices otherwise would possibly assist some, however our earlier evaluation has discovered it might probably additionally penalise some actually vulnerable households.

“However we proceed, there is a difficult balance to be struck, which is why it is important that as many people as possible respond to our call for input with their experiences of it, how it affects them and what the alternatives could be.”

Ofgem evaluation discovered that, whereas transferring to a cost associated to how a lot vitality clients use would profit low-income households general, there might be a big variety of clients made worse off.

Its case research present that round 1.2 million low-income, high-usage households with electrical heating could be worse off by roughly twice as a lot as those that would profit.

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2 November: UK Remains Vulnerable To Supply Disruption

Energy payments will rise subsequent yr, in line with analyst Cornwall Insight’s forecasts for the regulator’s value cap, writes Candiece Cyrus.

The cap, which limits the quantity suppliers can cost their clients in standing expenses and for every unit of gasoline and electrical energy they use, is ready quarterly by Ofgem, based mostly on wholesale vitality costs.

Cornwall Insight predicts the cap, which is adjusted quarterly, will rise in January from its present stage of £1,834 a yr to £1,923 a yr (figures are for a median vitality consumption family on a twin gas tariff paying by direct debit). This is steeper than the rise to £1,898 a yr it predicted in September.

The analyst forecasts that the cap will rise to £1,929 a yr in April, fall to round £1,880 in July and rise once more to round £1,917 in October, preserving it above its present stage all through 2024.

In September, the analyst predicted the cap would fall under its present stage from April subsequent yr to £1,820, then £1,781 in July earlier than rising to round £1,825 within the fourth quarter.

Cornwall Insight’s new forecasts consider volatility available in the market attributable to the Israel-Hamas battle, industrial motion at liquid pure gasoline amenities in Australia and harm to Finland’s Balticconnector gasoline pipeline.

Similar to Russia’s invasion of Ukraine, these occasions spotlight the potential menace of disruption to the UK’s vitality provide, significantly this winter, as temperatures drop.

The National Grid ESO confirmed earlier this yr that it might supply the Demand Flexibility Service this winter, providing households and businesses with sensible meters the chance to earn reductions on their electrical energy payments through the use of much less vitality throughout peak utilization hours.

The service is barely used when there’s a menace of vitality demand outstripping provide.

Dr Craig Lowrey, principal marketing consultant at Cornwall Insight, mentioned: “The bounce in value cap predictions since September has as soon as once more highlighted the vulnerability of UK vitality costs – and buyer payments – to geopolitical occasions.

“The Russian invasion of Ukraine demonstrated there’s a delicate steadiness within the international vitality market which might simply be disrupted by surprising occasions, and it seems to be as if the present scenario is repeating that sample.

“The authorities must take steps to proactively restrict the influence that such conditions have on the UK’s vitality market, and already stretched households, reasonably than reacting to occasions as they happen. Stop-gap measures akin to social tariffs and one-off funds are useful, however they aren’t a long-term answer.

“While the UK will never be entirely protected from global price increases, reducing the country’s reliance on imported energy and prioritising sustainable, domestically sourced energy will help protect the country from international energy shocks, and work to stabilise prices over the next decade.”

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1 November: Final Amount Hinges On Success Of Octopus

Energy clients might see almost £3 billion added to their payments to cowl the cost of defending shoppers when their suppliers went bust throughout the vitality disaster in 2021, writes Candiece Cyrus.

The House of Commons Public Accounts Committee says round £2.7 billion of taxpayer money was used to cowl the cost of transferring clients of 28 failed corporations, with the expectation being that this can be recouped by way of vitality payments.

But the Committee says this determine might rise to over £2.9 billion as soon as the cost of rescuing 1.5 million clients of the most important company failure, Bulb, are taken into consideration.

The Bulb case alone cost taxpayers a complete of £3.206 billion, and the federal government is barely anticipated to recoup £2.96 billion from Octopus, which acquired Bulb’s clients – and that determine relies on Octopus’s business success.

The Committee fears the estimated £246 million shortfall could also be borne by bill-payers at a time when family budgets are already stretched by the cost of residing disaster.

The Committee added that some households that want assist with their payments usually are not receiving it, saying solely 76% of credit score vouchers that have been issued to households on prepayment plans final winter have been redeemed.

Some vitality clients have reported not receiving their vouchers.

Dame Meg Hillier MP, chair of the Committee, mentioned: “Our report is a sobering reminder that we are still living with the fallout of the failure of so many energy suppliers in 2021-22. While the Government and regulators did the right thing in moving swiftly to protect consumers, the uncomfortable truth remains that the recovery of that investment hangs on the commercial success of one company. The public can ill afford such uncertainty, particularly in challenging economic times.”

An Ofgem spokesperson mentioned: “Protecting shoppers is our prime precedence and we labored tirelessly with authorities to place measures in place to protect clients from the influence of Bulb going out of business. Since then, we’ve taken a variety of agency steps to strengthen the resilience of the sector to scale back the danger of future provider failures and to restrict the influence on shoppers in the event that they do fail.

“We can and do decline licence applications by new energy companies where we are not convinced the organisation is resilient enough to weather the volatility of the current energy market. We also require organisations to assess their management control frameworks and provide assurance to Ofgem.”

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18 October: Firms Told To Publish Customer Reviews

Energy suppliers are to be required by Ofgem, the market regulator, to contact clients in the event that they miss two month-to-month funds or one quarterly cost, to examine if they’re struggling financially and, in that case, to supply assist. This might be through an reasonably priced cost plan or reimbursement vacation, writes Candiece Cyrus.

Additionally, suppliers will should be available through a number of contact strategies (akin to phone in addition to e-mail or through the web site), prioritise enquiries from the vulnerable, such because the elderly and the disabled, and supply free contact strategies (akin to a freefone quantity) for these struggling to pay their payments.

They can even be required to publish Citizens Advice customer support rankings on their web sites to allow households to make knowledgeable selections when switching. The rankings are up to date quarterly and canopy elements akin to name ready occasions, e-mail response occasions, invoice accuracy and complaints information.

The obligations, efficient 14 December, are a part of a bid by regulator Ofgem to enhance requirements. They are the end result of a session between Ofgem, clients, suppliers, client teams and charities, performed in May.

Jonathan Brearley, head of Ofgem, mentioned: “With recent international occasions growing strain on gasoline costs, it’s probably that payments will rise additional. This is why the business must do all it might probably to make sure good buyer providers and supply assist with managing debt, particularly for probably the most vulnerable.

“In the final yr, we’ve seen some good examples of suppliers stepping up their assist for purchasers. However, regardless of this, the sensation of these on the frontline working with vulnerable households is that extra nonetheless must be completed.

“Long wait times to speak to someone on the phone. Letters not replied to. Lack of empathy for people’s personal circumstances. This needs to change and today we are setting out our expectations of suppliers this winter, and how they will be held to account to ensure consumers can get hold of them more easily. In particular for vulnerable customers, we expect more proactivity and a more sympathetic response.”

Energy UK, which represents suppliers, has aligned with Ofgem and Citizens Advice to develop its Winter 2023 Voluntary Debt Commitment, outlining methods the taking part 14 suppliers ought to assist clients (see update under).

However, Ofgem additionally proposed a short lived improve to vitality payments from April 2024 to stop suppliers from going bust, as buyer debt hit £2.6 billion in the summertime (see update under).

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12 October: Bills Would Rise £1.50 A Month For Q2 2024

Households might face a one-off rise of their vitality payments of as much as £17 a yr to stop suppliers from going bust, writes Candiece Cyrus.

Regulator Ofgem has proposed the transfer as a part of a session on methods to guard suppliers from going bust due to buyer debt, which reached £2.6 billion this summer season, its highest recorded stage.

In 2021, round 30 suppliers folded once they have been unable to cross rising wholesale prices on to clients rapidly sufficient. The cost of administering the switch of their clients to different corporations and sustaining vitality provides added £82 to each family’s vitality payments.

The disaster additionally prompted Ofgem to maneuver to quarterly reasonably than six-monthly changes to the cap, making it extra aware of wholesale value actions.

The non permanent rise could be utilized with subsequent April’s value cap and final for 3 months, including round £1.50 to the common family’s payments per thirty days (equal to £17 a yr). The cap dictates the utmost quantity suppliers can cost households per unit of vitality, and in standing expenses.

Such changes to the cap are permitted below its phrases to permit suppliers to recoup in any other case unrecoverable debt.

The cap fell from £2,074 within the final quarter to its present stage for This fall 2023 of £1,834 a yr for a typical consumption family, based mostly on Ofgem’s revised decrease common utilization figures which it is going to discuss with from this month, October. Based on its old figures, the cap could be £1,923 a yr for a typical family.

The cap is anticipated to rise once more in January 2024 to £1,898 a yr and fall to £1,820 in April, in line with analyst Cornwall Insight.

Unaffordable vitality payments led to charities, campaigners and MPs sending an open letter to the federal government final month to induce it to meet its pledge to introduce a subsidised ‘social’ tariff for low-income households (see update under).

Tim Jarvis, director common for markets at Ofgem, mentioned: “We know that households throughout the nation are fighting wider cost of residing challenges, together with vitality, so any resolution so as to add prices to the value cap isn’t one we take flippantly.

“However, the scale of unrecoverable debt and the potential risk of suppliers leaving the market or going bust, which passes on even greater costs to households, means we must look at all the regulatory options available to us.”

Dame Clare Moriarty, chief govt of charity Citizens Advice, mentioned: “Even earlier than winter hits we’re serving to extra individuals who can’t sustain with their vitality payments than ever earlier than. Worryingly, extra households are operating up vitality money owed throughout the hotter months, with some having to borrow money to attempt to hold the lights on.

“High vitality costs imply thousands and thousands of individuals stay liable to falling behind within the coming months. An improve within the value cap to pay for greater money owed will make individuals’s payments much more unaffordable. Any change should be in one of the best curiosity of all shoppers.

“For now, the government must provide additional bill support this winter for those at most risk.”

Energy UK, which represents suppliers, has additionally printed the Winter 2023 Voluntary Debt Commitment, developed with Citizens Advice and Ofgem. It units out the steps 14 taking part suppliers will take to supply assist akin to:

providing monetary assist to clients within the type of debt write-off schemes, hardship funds and lowering or waiving standing expenses for sure clients
proactively establish struggling clients and establishing partnerships with applicable charities to supply extra recommendation
coaching workers to make sure correct billing
encouraging clients to contact them to reveal vulnerabilities i.e. being elderly, residing with young youngsters
bettering vitality effectivity in properties.

The corporations concerned 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.

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30 September: Prices Remain Close To Historic Highs

With the vitality market value cap set to vary on Sunday, an open letter signed by 140 charities, campaigners and MPs is urging the federal government to meet its pledge to guard low-income households in opposition to unstable vitality costs by introducing a social tariff, writes Candiece Cyrus.

The cap limits the quantity suppliers can cost households per unit of gasoline and electrical energy and in related standing expenses. Set quarterly, it is going to fall from £2,074 to £1,834 a yr for a typical consumption family from 1 October (see story under).

The new cap stage, which relies on Ofgem’s revised decrease utilization figures in impact from October, and could be £1,923 a yr for a typical households, based mostly on its old figures, stays excessive in historic phrases. As just lately as March 2022, the cap stood under £1,300.

Poverty marketing campaign group National Energy Action, Age UK and Citizens Advice are amongst these asking the federal government to assist people “whose bills have become so unaffordable that they are having to make the desperate choice nobody should have to make – between heating and eating.”

The letter can be signed by unbiased MP Angus MacNeil MP, chair of the Energy Security and Net Zero Committee, and Plaid Cymru’s Ben Lake MP, chair of Fuel Poverty and Energy Efficiency All-Party Parliamentary Group.

Separately, Mr MacNeil has criticised vitality firms for holding onto what he says is an extreme quantity of buyer money within the type of credit score on their accounts. BBC analysis revealed that corporations successfully held £8bn of their clients’ money within the first quarter of the yr.

With regard to a social tariff, the federal government dedicated in final yr’s Autumn Statement “to develop a new approach to consumer protection in energy markets, which will apply from April 2024 onwards” and to “work with consumer groups and industry to consider the best approach, including options such as social tariffs.”

A social tariff is priced to make it extra reasonably priced for these struggling to pay their payments. Water, broadband and telephone firms already present any such tariff, however one has not but been launched for vitality clients.

To qualify, an individual normally must be receiving sure means-tested advantages akin to Universal Credit or Pension Credit or have a power medical situation that necessitates above-average vitality consumption.

The marketing campaign group says UK households behind on their vitality payments now owe £2.25 billion, a rise of greater than 70% over the previous three years.

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29 September: Average Annual Bills To Dip Below £2,000

The vitality value cap, which determines the quantity suppliers can cost households per unit of gasoline and electrical energy and in related standing expenses, will fall for a consecutive quarter on Sunday 1 October, writes Candiece Cyrus.

The cap, which is ready by market regulator Ofgem each three months to mirror actions in wholesale vitality costs, will stand at £1,834 a yr till 31 December. This determine is down from £2,074 a yr within the three months to October.

It relies on a typical vitality consumption family on a twin gas tariff, paying by direct debit, in line with Ofgem’s revised decrease common utilization figures, which the regulator will discuss with from subsequent month. Based on its old figures, the cap would stand at £1,923 a yr for a typical family. Ofgem can be decreasing the same value limits that apply to vitality clients paying by different strategies.

The cap doesn’t restrict the scale of a family’s invoice, which is at all times decided by how a lot vitality it makes use of. Bills additionally fluctuate in line with the placement of the client, reflecting the cost of provide in a specific area.

Campaigners have expressed concern that the discount within the cap itself doesn’t embrace a reduce within the standing expenses which might be added to all payments. The gasoline standing cost is growing by a penny to 30 pence per day on common.

Since these expenses are fastened and utilized universally, they scale back the advantage of slicing consumption.

According to Ofgem, the value cap change will convey the common twin gas invoice under £2,000 for the primary time since April 2022. At that point, it stood at £1,971 a yr. The regulator says the cap, at its present stage, will save households a median of £151 on the earlier quarter.

However, there can be no authorities assist this winter to match the £400 paid in instalments to all households between October 2022 and March 2023, when payments have been capped at £2,500. This means shoppers will see little profit from the cap discount.

Ofgem’s revised common vitality utilization figures that come into impact on 1 October bear in mind a discount in common family vitality consumption ensuing from individuals utilizing much less vitality to avoid wasting money, and likewise the long-term influence of improved effectivity of home equipment and higher building insulation.

The regulator discovered that the common family now makes use of 2,700 kWh in electrical energy, and 11,500 kWh in gasoline, a yr, down from 2,900 kWh and 12,000 kWh respectively.

Based on the brand new figures, analyst Cornwall Insight forecasts the cap to fall to round £1,898 a yr in January subsequent yr earlier than falling once more to round £1,820 in April. It predicts the cap will fall additional to £1,781 in July earlier than rising to round £1,825 within the final quarter of the yr.

However, if the present common vitality consumption figures have been retained, it says the cap would rise by 3.5% to £1,996 a yr in January 2024, earlier than falling to £1,912 in April and £1,872 in July earlier than rising to £1,922 a yr in October.

As wholesale vitality costs have fallen and stabilised, suppliers have begun to begin providing fastened offers once more. These tariffs, which guarantee vitality clients a set charge per unit of vitality, normally for 12 months, have been largely absent from the open marketplace for over a yr as a result of excessive and unstable costs.

While fixed-rate tariffs shield households in opposition to value rises throughout the time period, households can find yourself paying greater than the cap if costs fall. The offers normally include ‘exit penalties’ designed to discourage clients from leaving early. These might be £75 or extra per gas.

The desk under reveals a number of the fastened tariffs presently available from main suppliers.

Fixed-rate tariffs available to new and current clients

Fixed-rate tariffs available to current clients solely

E.on Next is providing a tariff that tracks the vitality value cap. The E.on Next Pledge tariff will at all times be round £50 lower than the cap, which suggests will probably be round £1,870 from October. The value will change each three months to mirror actions within the vitality value cap.

Customers should pay £25 per gas to stop the deal greater than 42 days earlier than the tip of the time period (all fixed-rate tariffs should supply this exit charge-free interval as they method the tip of the time period). The tariff is available to current clients who pay by direct debit.

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25 September: Action Urged To Curb Fuel Poverty

A cross-party committee of MPs has known as for the federal government, the vitality regulator Ofgem and suppliers to do extra to assist households this winter, writes Candiece Cyrus.

The Energy Security and Net Zero Committee’s Preparing for the Winter report suggests measures the federal government, Ofgem and suppliers can take to assist households in time for the upcoming colder months.

According to the Committee, 6.6 million households are in gas poverty, which is mostly outlined as needing to spend 10% or extra of their earnings on vitality. This compares to 4.5 million in 2021.

The report recommends the federal government extends the Warm Home Discount scheme, which offers low-income households and people in or liable to gas poverty with a £150 cost throughout the winter.

Since 2021, vitality clients have solely certified for the scheme in the event that they obtain sure means-tested advantages, tax credit or pension credit score and stay in a property with a excessive vitality cost rating as decided by the Valuation Office Agency.

The committee suggests extending the scheme to the disabled, elderly, these with power medical circumstances and people on low incomes who might not in any other case qualify.

It additionally calls on the federal government to make sure households that missed out on the federal government’s Energy Bills Support Scheme funds totalling £400 final winter, resulting from not receiving vouchers, for instance, obtain their funds with quick impact.

Other measures embrace speeding-up the rollout of sensible meters and remodelling the standing cost cost construction to at least one based mostly on the quantity of vitality a family makes use of. Currently, the cost, which covers the cost of a provider delivering vitality to a property amongst different operational prices, is ready as a every day charge.

Smart meters enable households to watch the vitality they use and establish areas the place consumption might be diminished. The meters additionally mechanically present real-time information to suppliers, for extra correct payments.

The report additionally suggests the federal government works with suppliers to create a ‘social’ tariff to assist these in gas poverty, and Ofgem and vitality suppliers take a extra proactive method to bettering business requirements.

This would come with offering a precedence telephone line for client organisations and charities looking for assist on behalf of their purchasers.

It says Ofgem must also require that each one clients, significantly these in gas poverty, obtain continuity of assist from their provider. This contains steerage with figuring out the place they qualify for monetary assist

Angus Brendan MacNeil MP, chair of the Energy Security and Net Zero Committee, mentioned: “The nights are actually drawing in and lots of of our most vulnerable individuals can be haunted by harrowing reminiscences of the relentless sacrifices they have been pressured into final yr, simply to maintain their heads above water within the face of exorbitant vitality prices.

“While financial support will be vital, there also needs to be a drastic improvement in customer service and the empathy shown by energy companies to those who are going through tough times. If these firms don’t improve, Ofgem must be less backwards in coming forward and give them a good shake to ensure they are working in the best interests of their customers this winter.”

Separately, Prime Minister Rishi Sunak has scrapped his vitality effectivity process pressure six months after establishing it.

The 15-member group’s purpose was to scale back complete UK vitality demand by 15% from 2021 ranges by 2030, throughout home and business property and industrial processes. Its work included dashing up the set up of insulation in much less vitality environment friendly properties and upgrading boilers.

Mr Sunak’s transfer is a part of an announcement final week the place he confirmed delaying the phasing out of gasoline boilers and a pushing-back of the ban of the sale of latest petrol and diesel vehicles from 2030 to 2035.

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14 September: GB Insulation Scheme Offers £400 Bill Savings

Energy clients in decrease council tax bands residing in much less vitality environment friendly properties can now apply for presidency assist to enhance insulation of their properties and save money on their vitality payments, writes Candiece Cyrus.

Previously, such schemes have been available solely to these on sure state advantages, however to be eligible for the Great British Insulation Scheme, households solely have to:

stay in properties in council tax bands A-D in England or A-E in Scotland and Wales (the scheme doesn’t function in Northern Ireland)
have an Energy Performance Certificate (EPC) score of D or under (EPCs have bands from A to G, with A being probably the most environment friendly).

According to the federal government, 47% of properties throughout Britain had a certificates score of D or under in 2022.

Applications might be made through gov.uk. The course of entails answering questions on the kind of home and any insulation that presently exists, together with EPC particulars and family earnings.

This determine can be used to find out whether or not the family can be requested to make a contribution to the cost of the undertaking. The course of asks whether or not family earnings is above or under £31,000 every year, which means that these with earnings above this stage could also be requested to pay as much as 10% of the cost.

Anyone who doesn’t have an EPC can be supplied with one by their vitality provider, which is able to fee an permitted installer to evaluate the property and suggest probably the most applicable plan of action.

Unlike different ‘whole house’ vitality effectivity initiatives, the Great British Insulation Scheme solely offers for one type of insulation upgrade, akin to loft insulation or cavity wall insulation, however not each.

The work will solely proceed if the householder agrees to the proposal and any requirement to make a monetary contribution.

The authorities says the 300,000 households which might be eligible for the scheme might every save as much as £400 a yr on their vitality payments.

The scheme will run alongside the Energy Company Obligation (ECO) scheme, which offers free home vitality effectivity upgrades, together with warmth pumps, photo voltaic panels and insulation to low-income households.

The authorities has additionally launched a web based eligibility checker for the Home Upgrade Grant. The grant helps properties that aren’t on the gasoline grid with vitality effectivity upgrades if they’ve an Energy Perfomance Certificate score of D to G. According to the federal government 25,000 properties are eligible.

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13 September: Ofgem Extends Forced PrePay Meter Protection

Suppliers will not be capable of forcibly set up prepayment meters within the properties of these owing on their vitality payments who’re aged over 75 and stay with no assist, or stay with youngsters below the age of two, writes Candiece Cyrus.

The no-install rule presently solely applies to vitality clients aged 85 and over, and people with extreme well being points, together with clients who’ve a terminal sickness or a situation that requires a heat home.

The prolonged guidelines, introduced by regulator Ofgem, take impact from 8 November. They broaden the scope of the voluntary Code of Practice it launched in April, to which all vitality suppliers have agreed to conform.

The Code additionally requires suppliers to try to contact a buyer no less than 10 occasions earlier than putting in a prepayment meter. Suppliers must also chorus from putting in such meters within the properties of those that want a relentless vitality provide resulting from their well being, and those that are unable to top-up their meter resulting from psychological or bodily incapacity.

Supplier representatives ought to go to a buyer to examine for vulnerabilities earlier than deciding to put in a prepayment meter, and put on an audio or digicam machine to watch the method of any vulnerability examine or prepayment meter becoming.

If a meter is put in, the provider ought to present £30 in credit score to scale back the danger of a buyer shedding provide resulting from not having the means to prime up. Suppliers should additionally reassess circumstances as soon as a buyer has repaid the debt they owed.

Currently, no suppliers are finishing up involuntary installations. During the 56-day discover interval between now and eight November, suppliers should establish the place they’ve wrongfully put in involuntary prepayment meters and supply the purchasers involved compensation and a non-prepayment cost technique, earlier than they’ll restart involuntary prepayment meter installations.

They can even want to supply Ofgem with information on their involuntary installations.

The Code was Ofgem’s reply to stories of suppliers akin to British Gas wrongfully finishing up pressured prepayment meter fittings within the properties of ‘vulnerable’ clients, together with the elderly, who struggled to pay their vitality payments.

From 8 November, if suppliers breach the principles they might face ‘severe penalties’, though Ofgem has not revealed what these are.

Neil Kenward, Ofgem’s director for technique, mentioned: “Prepayment meters are an necessary cost technique that helps thousands and thousands of households to handle their vitality payments. But they aren’t appropriate for everybody.

“Today’s enhanced rules are there to provide protection from bad practice while ensuring that when needed, and as a matter of last resort, suppliers are using involuntary installations in a fair and responsible way.”

Louise Rubin, head of coverage at incapacity charity, Scope, mentioned: “The new guidelines outlined at this time are a welcome enchancment however they don’t go far sufficient. There is not any guarantee {that a} disabled family won’t face a pressured PPM set up this winter.

“We are disappointed that Ofgem did not go further and ban forced installation of meters and remote switching outright for all disabled people.”

1 September: Storm Payments Triple Following Review

Compensation for households and businesses that lose energy on account of extreme climate occasions has been almost tripled, writes Candiece Cyrus.

The most compensation vitality clients can obtain resulting from extreme storms will improve to £2,000, up from £700, below new guidelines set down by Ofgem, the vitality regulator.

It follows its overview into how distribution community operators responded to Storm Arwen which, in November 2021, noticed round 40,000 shoppers throughout Great Britain with out energy for 3 days and almost 4,000 with out energy for greater than every week.

Six main community operators – which embrace UK Power Networks and National Grid Electricity Distribution – are accountable for linking up properties and businesses to the electrical energy community.

Ofgem’s modifications additionally embrace a rise of preliminary funds from £70 to £80. These should be made if energy fails to be restored after 24 hours for a class 1 storm, or after 48 hours for a class 2 storm. Previously, preliminary funds have been solely triggered if energy was not restored after 48 hours, no matter storm sort.

A storm’s class for these functions is outlined by the influence it has on the electrical energy community.

Ofgem’s modifications additionally embrace lowering the size of time clients should wait for added compensation from 12 to 6 hours, paying compensation by financial institution switch, and a brand new mechanism which is able to alter funds to inflation.

Ofgem says the modifications imply extra clients can be entitled to greater ranges of compensation ought to they be left for prolonged intervals with out energy. Network operators that flout the principles might face multi-million-pound fines.

Akshay Kaul, director common of infrastructure at Ofgem mentioned: “It’s unacceptable that hundreds of households have been left with out energy in freezing circumstances for a chronic interval throughout Storm Arwen, usually with poor details about when their energy could be restored.

“Many also found it hard to get the compensation they were entitled to afterwards, and that’s why we’ve put tough new rules in place.”

Mr Kaul added that, whereas ‘lessons have been learnt’, the frequency of maximum climate occasions is barely set to extend and community providers should be resilient.

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1 Sept: Octopus Adds 1.4m Customers With Shell Purchase

Octopus Energy has agreed to purchase Shell’s family vitality businesses within the UK and Germany.

The transfer will add 1.4 million properties to Octopus’s books, extending its attain to just about 6.5 million UK households. The deal additionally contains the adoption of 500,000 broadband clients.

Following regulatory approval, the transfer is anticipated to be accomplished later this yr at which period Shell will contact clients about subsequent steps.

Octopus mentioned “there will be a smooth transition and no disruption to customer energy supply”. It added that “customer credit balances are protected and will automatically get transferred to their new account.”

The deal will make Octopus the UK’s second-largest vitality provider behind British Gas, the Centrica-owned agency that has roughly 7.4 million home clients.

25 August: No Immediate Prospect Of Return To 2021/22 Levels

The Energy Price Cap, set every quarter by regulator Ofgem, will fall from £2,074 every year for a typical consumption family paying by direct debit to £1,923 from 1 October.

For households with a prepayment meter, the cap can be £1,949, down from £2,077. The common invoice for these paying by different means, akin to cheque or money, will fall to £2,052 from £2,211.

This is the primary time since September final yr that the principle cap can be under £2,000. In March 2022, it stood at £1,277, that means it is going to nonetheless be almost 50% greater than 18 months in the past.

The cap limits how a lot vitality suppliers can cost for every unit of gasoline and electrical energy and related standing expenses. It isn’t a cap on precise payments, that are decided by the quantity of vitality consumed.

Ofgem units the cap as regards to wholesale vitality costs, which have fallen in recent months because the market has adjusted to the scenario ensuing from Russia’s invasion of Ukraine. However, market analyst Cornwall Insight has urged the cap might rise in January if threatened strike motion at liquid pure gasoline amenities in Australia goes forward and disrupts worldwide provide preparations.

Quite a lot of vitality firms have began to supply fixed-term, fixed-rate vitality tariffs as costs have fallen. Such tariffs have largely been absent from the open marketplace for a yr because of the volatility of costs.

Energy fixing secures you a assured charge per unit of vitality, normally for 12 months, and normally at a value near the prevailing value cap. This protects you if costs rise, however threatens to depart you on a comparatively costly deal if costs fall.

While there’s an expectation that costs would possibly tick upwards once more in the beginning of 2024, the hope is that they’ll fall within the second and third quarters of the yr. But this may hinge on financial and geo-political stability being maintained, in addition to the severity of the approaching winter, which is able to have an effect on demand.

Customers pondering whether or not to repair or not ought to weigh these uncertainties in opposition to the advantages of locking in a value and having fun with budgeting certainty throughout the repair. Anyone wishing to exit a set charge deal throughout the time period will usually face an exit penalty, normally set at £30 per gas or extra.

The continued excessive value of home vitality provide is more likely to renew requires the introduction of a social tariff geared toward lowering the payments of these in gas poverty – which is the place a disproportionate quantity of family earnings is swallowed by vitality prices.

Energy firms and Ofgem, together with charities and poverty campaigners, have backed the introduction of such a tariff, however the authorities has declined to provide the inexperienced mild to such a proposal, which might require funding from different bill-payers or from public funds.

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Average consumption figures

From October, Ofgem is introducing new figures displaying its estimate for common family consumption. These will mirror the truth that households usually are utilizing much less vitality as they attempt to save money and profit from improved effectivity of home equipment.

At current, typical annual consumption is outlined as 12,000 kWh of gasoline and a pair of,900 kWh of electrical energy. These are the figures used for at this time’s cap announcement.

From October onwards, Ofgem will use decrease figures of 11,500 kWh for gasoline and a pair of,700 kWh for electrical energy. These can be mirrored for the primary time within the cap that runs from 1 January – 31 March 2024.

19 August: Figures Reflect Reduction In Estimated Average Usage

Market analyst Cornwall Insight has issued its estimates for future vitality value caps, set every quarter by Ofgem, the regulator.

The cap, which displays wholesale vitality prices, limits how a lot vitality firms can cost for every unit of gasoline and electrical energy used, together with related standing expenses – it isn’t a cap on precise payments.

The current cap, which got here into impact on 1 July, is £2,074 a yr for a median consumption family on a twin gas tariff paying by direct debit.

This is down steeply on earlier iterations of the cap and its non permanent substitute, the federal government’s vitality value guarantee, and the autumn was cited by the Office for National Statistics final Wednesday as a purpose for the sharp fall in inflation in July to six.8% (from 7.9% in June).

Average consumption is outlined as utilizing 12,000 kWh of gasoline and a pair of,900 kWh of electrical energy a yr. However, from October onwards, Ofgem will use decrease figures to mirror the truth that typical family consumption has fallen due to a mixture of vitality saving by shoppers attempting to chop their payments, and the development in effectivity of many family units.

The new figures can be 11,500 kWh for gasoline and a pair of,700 kWh for electrical energy. To signify this variation, Cornwall has issued two units of figures that present every foundation for calculation.

Using present consumption figures, the October cap is estimated to be £1,926. With the decrease consumption averages in play, Cornwall says will probably be £1,824. Ofgem will verify the determine on 25 August.

It is necessary to do not forget that the brand new foundation of calculation doesn’t in itself sign a decreasing of vitality costs – it displays assumptions about how a lot vitality is being consumed by a typical family.

Looking additional forward, Cornwall says the January 2024 cap will then bounce considerably (£2,083 old foundation, £1,980 new foundation), largely due to the specter of strike motion at liquid pure gasoline amenities in Australia, which might threaten to extend wholesale costs.

For Q2 2024 the figures are £2,015/£1,915 and for Q3 they’re £1,965/£1,867. It is mostly agreed that forecasts are much less dependable the additional they’re sooner or later, exactly due to geopolitical and financial uncertainties and the influence of the climate on demand.

Commenting on the brand new estimates, Craig Lowrey at Cornwall Insight mentioned: “While a small lower in October’s payments is to be welcomed, we as soon as once more see vitality value forecasts far above pre-crisis ranges, underscoring the constraints of the value cap as a device for supporting households with their vitality payments.

“As many, including Ofgem have acknowledged, it is essential that the government explores alternative solutions, such as social tariffs, to ensure stability and affordability for consumers.”

27 July: Average Bills Reported To Be £200 Cheaper In 12 Months

Cornwall Insight, the vitality market analyst, is forecasting that the Ofgem value cap will fall additional than first predicted when it’s revised in October, writes Candiece Cyrus.

The cap is adjusted each quarter to mirror modifications in wholesale costs. In early July, Cornwall mentioned the cap, which is presently £2,074 a yr for households with typical consumption, would fall to £1,878 for the fourth quarter. It now says it is going to attain £1,861.

However, the analyst has revised its estimate for the primary quarter of subsequent yr upwards, from £1,917 to £1,959. Similarly, the estimate for April – June 2024 has risen from £1,888 to £1,917.

Cornwall has additionally printed its first estimate for the third quarter of subsequent yr, which reveals costs falling to £1,870, over £200 decrease than at current.

26 July: Improvements This Winter For Households, Businesses

Regulator Ofgem has set out an inventory of proposals to enhance vitality providers for households and businesses, writes Candiece Cyrus.

This contains prolonged provider opening hours for households and improved complaints dealing with for business clients.

Ofgem mentioned its proposals would ‘establish expectations’ to make sure all clients expertise a ‘consistent and acceptable level of service regardless of the company they are with’.

For households, it proposes vitality corporations:

prolong their opening hours together with evenings and weekends and supply a number of contact strategies together with e-mail and webchat
prioritise vulnerable clients who may have quick assist
present 24/7 emergency assist for households reduce off from their vitality provide resulting from issues with their provider, akin to a meter fault
supply simpler assist to financially struggling clients, akin to non permanent reimbursement holidays
publish info on customer support efficiency to assist households make an knowledgeable resolution when switching, and drive their very own efficiency.

For businesses, the regulator is reviewing the challenges the market presents. It will seek the advice of on:

bettering customer support throughout criticism dealing with
bettering steerage round ‘deemed contract rates’ for purchasers who haven’t agreed contractual phrases with a provider to stop points akin to overcharging
extending ‘micro business’ protections to all firms, together with making vitality corporations reveal the quantity they pay to vitality brokers
permitting businesses the means to resolve disputes by way of a redress scheme.

The regulator has additionally set the extent of capital that vitality suppliers are required to carry to have the ability to face up to market shocks after 30 corporations collapsed in response to rising wholesale costs in 2021/22.

Ofgem can be proposing it’s granted the ability to instruct suppliers to ringfence a portion of their buyer credit score balances whether it is within the curiosity of the buyer.

A statutory consultation on home client requirements will shut on 23 August 2023. A call on home client requirements is anticipated to be printed by early October.

Ofgem is proposing to have many of those necessities in place by December 2023 to assist shield and assist shoppers over the winter.

Proposals from the non-domestic overview can be printed in a statutory session in autumn 2023 with any licence modifications anticipated to be applied in winter 2023/24.

25 July: Fixed Rates Unlikely To Trump SVRs Over 12 Months

Regulator Ofgem is warning households to assume earlier than they change to a fixed-rate tariff following the return of such offers in recent weeks for the reason that revised value cap took impact on 1 July, writes Candiece Cyrus.

Its message coincides with information from analyst Cornwall Insight which reveals that switching to one of many new crop of fastened tariffs is unlikely to ship financial savings on vitality payments over the following 12 months.

Suppliers have launched tariffs priced near the £2,074 annual value cap for typical consumption households (see update under) following falls in wholesale vitality costs.

Ofgem tweeted at this time: “Fixed-rate energy tariffs have seen a return to the market but check if they are right for you. Prices are still unpredictable and signing up for a fixed rate now might mean you miss out if prices fall in the future.”

Fixed tariffs enable vitality clients to lock right into a set value per unit of vitality, for sometimes 12 or 24 months. This can enable them to handle their funds extra simply, than these on a regular variable charge (SVR) tariff.

Ofgem’s cap limits how a lot suppliers can cost clients per unit of vitality and in standing expenses on an SVR tariff, with updates in step with fluctuating wholesale costs made on a quarterly foundation. There is not any cap on payments themselves, which at all times mirror the quantity of vitality consumed.

Most households are on SVR tariffs after suppliers eliminated their fastened tariffs from the market when wholesale vitality costs started to soar resulting from Russia’s invasion of Ukraine.

Households on fastened tariffs will pay lower than SVR clients if wholesale costs improve throughout the time period of the contract, or pay extra in the event that they fall.

Cornwall Insight says those that signed as much as the most affordable fastened deal available in the beginning of this month – Utility Warehouse’s Fixed Saver, priced at £1,974 per yr for typical utilization – are more likely to pay the identical as an SVR buyer over the following 12 months.

The analyst’s calculations are based mostly on the present cap stage (£2,074) and its latest forecasts for the following three quarters, which stand at:

October – December 2023: £1,878
January – March 2024: £1,917
April – June 2024: £1,888.

James Mabey, analyst at Cornwall Insight mentioned: “The return of vitality fixing has captured the eye of the nation over the previous few months, as many households search to safe decrease and extra steady vitality offers.

“Based on our present forecasts, clients are unlikely to lose out by taking a one-year fastened deal, nonetheless, it’s uncertain these offers will lead to vital financial savings, if any in any respect.

“While there are currently limited financial gains to be made from taking up domestic fixed tariffs, they offer a sense of security to consumers amid the recent volatility observed in the energy market. The desire for stable prices among households may increase the number of people who sign-up for the fixed deals.”

18 July: 12-Month Deal Set At £2,100 – £26 Above Price Cap

Energy provider EDF is providing new and current clients a 12-month fastened deal on gasoline and electrical energy set at £2,100 for the common family with typical vitality consumption, writes Candiece Cyrus.

This compares to vitality regulator Ofgem’s vitality value cap for default variable charge tariffs, which stands at £2,074 a yr for the common family with typical vitality consumption.

Actual payments, no matter tariff, are decided by the quantity of vitality consumed.

EDF’s Essentials Exclusive Jul24 supply is available to households that use a sensible meter, or are keen to have one put in on signing as much as the tariff. It expenses a dual-fuel (gasoline and electrical energy) exit price of £150 ought to a buyer go away the tariff early.

Exit charges are levied as much as 42 days earlier than the tip of a deal’s time period.

EDF’s supply joins a restricted variety of 12-month fastened offers presently in the marketplace:

Available to new and current clients:

British Gas The Fixed One v23: £2,099 a yr, £200 dual-fuel exit price. Available direct to clients from the provider
So Energy So Juniper: £2,047 a yr, £150 dual-fuel exit price. Available direct to clients from the provider
Utility Warehouse Fixed Saver 2: £1,974 a yr, £150 dual-fuel exit price. Available direct to clients who signal as much as two of its different providers.

Available to current clients:

British Gas Smart Aug24 v9/Smart Fixed v2: £2,072 a yr, £200 dual-fuel exit price. Only available to clients who’ve, or are keen to have, a sensible meter put in
E.on Next Next Loyalty Fixed v4: £2,006 a yr, £150 dual-fuel exit price. Available to clients on a set deal that has ended, or will finish, between 26 December 2022 and 18 September 2023
Octopus Energy Loyal Octopus 12M Fixed June 2023 v1: £2,100 a yr, £150 dual-fuel exit price
Ovo Energy 1 Year Fixed: £2,099 a yr, £150 dual-fuel exit price
Shell Energy July 2024 v11: £2,065 a yr, £150 dual-fuel exit price.

The new EDF deal reveals indicators that the vitality market could also be stabilising following Russia’s invasion of Ukraine, and the following sanctions on its vitality exports, which brought on wholesale costs to soar globally.

As a end result, suppliers eliminated their fastened offers from the market. Now, many of the offers in the marketplace are nonetheless solely available to suppliers’ current clients.

Most clients are actually on normal variable charge tariffs. The vitality value cap dictates the utmost quantity suppliers can cost clients per unit of vitality on any such tariff, based mostly on wholesale costs. This restrict is up to date quarterly.

On 1 July it dropped from £3,280 to £2,074 a yr for the everyday family, however vitality clients are nonetheless confronted with payments above historic ranges. The Ofgem cap was round £1,300 as just lately as March 2022 and nonetheless under £2,000 the next September.

Fixed tariffs lock vitality clients right into a deal for a acknowledged period of time – normally 12 or 24 months. They might be significantly helpful to households that need to finances with certainty.

However, if wholesale costs fall throughout the deal time period, fixed-rate clients can discover themselves paying considerably extra per unit of vitality than these on a regular charge tariff.

Neither the cap nor fastened offers restrict a family’s payments, that are decided by the quantity of vitality it makes use of. It is barely the speed per unit and the related standing expenses which might be capped.

Analyst Cornwall Insight’s latest predictions recommend the Ofgem cap can be up to date as follows, for a typical family per yr:

October – December 2023: £1,878
January – March 2024: £1,917
April – June 2024: £1,888.

However, wholesale costs stay liable to geopolitical upheaval, akin to additional battle in Ukraine, which explains the elevated curiosity in fixed-rate presents.

13 July: ‘Powerwall’ Will Harness Solar Energy To Charge EVs

Elon Musk, proprietor of electrical automobile producer Tesla, is reported to be launching an electrical energy provide agency centered on renewable vitality – Tesla Electric – within the UK, writes Candiece Cyrus.

Evidence for the transfer is a job advert for a Head Of Operations in London on the business-oriented social media platform LinkedIn.

At current, the agency operates in Texas, and advertises itself as serving to to “accelerate the transition to sustainable energy.”

Its most important device for doing that is its home electrical battery product, Powerwall. It permits households which have photo voltaic panels to promote extra electrical energy again to the grid mechanically when wholesale costs are excessive.

This attracts credit that are added to the family’s vitality account, saving it money on future payments. The actual particulars of how the service will work within the UK are but to be revealed.

However, UK vitality suppliers taking part within the authorities’s Smart Export Guarantee (SEG) scheme enable their clients to promote their electrical energy again to the grid. Households are placed on an SEG tariff and paid for every unit of vitality they feed again. An SEG provider might be totally different to the agency that gives the family’s vitality.

The quantity a family can earn will depend upon a variety of things, together with their location, their particular tariff and the positioning of their photo voltaic panels.

According to the Energy Saving’s Trust Solar Energy calculator, a family situated in London can save £298 a yr on their payments through the use of photo voltaic vitality.

The Powerwall additionally shops photo voltaic vitality which can be utilized throughout energy cuts or when the solar isn’t shining, and presents ‘intuitive’ car charging. This contains detecting when vitality is required indoors or when there’s an influence reduce and slowing, or stopping the charging of a automobile accordingly.

The Tesla web site says Powerwall additionally expenses an e-vehicle with surplus photo voltaic vitality whether it is plugged in whereas the solar is shining. The accompanying app permits customers to manage vitality distribution between their property and car. One Powerwall unit prices round £8,900.

Tesla Electric’s enlargement comes because the UK goals to ban the sale of latest inner combustion engine vehicles by 2030 and obtain net-zero carbon emission standing by 2050.

In its job advert, Tesla Electric says: “Tesla Electric is Tesla’s retail electrical energy providing, presently available to Tesla product homeowners in chosen markets globally, akin to Texas.

“Delivering a seamless, simple customer experience will ensure that small scale residential flexibility can be fully utilised to support the transition of the entire electricity grid to 100% renewables.”

7 July: Consumers To Be Rewarded For Avoiding Peak-Time Usage

Households and businesses with sensible meters in England, Scotland and Wales might once more be capable of earn reductions on their electrical energy payments through the use of much less vitality throughout peak utilization hours this winter, writes Candiece Cyrus.

The alternative can be available to clients of suppliers that present the Demand Flexibility Service when there’s a menace of vitality demand outstripping provide. Participants should use sensible meters that may ship readings to suppliers each half-hour.

Customers and not using a taking part provider might use an unbiased firm that might draw the mandatory information from their meter through an app.

We will update this web page with the corporations that can be taking part this winter as soon as the knowledge is available.

According to National Grid ESO, which ran the service between November 2022 and March 2023, round 1.6 million households and businesses participated, lowering electrical energy consumption by 3,300 megawatt hours over 22 peak intervals.

Participating households have been contacted by their suppliers prematurely of specified anticipated peak intervals for vitality demand – normally late afternoon/early evenings on weekdays – so they might reduce on their electrical energy utilization.

The community mentioned households might save £3 – £6 per kilowatt hour of vitality not used throughout the peak interval, although the precise quantity was decided by individual suppliers.

It is consulting on the ultimate phrases for this winter.

According to the outcomes of a survey of almost 24,000 members, 62% have been glad with their expertise and 83% would take part once more. Most of the respondents (85%) heard concerning the service by way of their supplier (a number of responses have been permitted).

When requested the principle motivations for participating, 76% of survey respondents mentioned the monetary profit, 41% mentioned the problem, and 37% mentioned their motivation was balancing the grid or ’preserving the lights on’.

When requested the principle advantages of participating, 42% cited satisfaction from managing the problem, 39% mentioned incomes rewards and 38% mentioned it was being a part of a nationwide collective effort.

However, sure demographics have been underrepresented akin to younger age teams, decrease earnings households, renters and metropolis residents. The community mentioned participation needs to be monitored to know inequalities in access to presents by way of the service, and variations within the outcomes of taking part.

National Grid ESO launched the discounting service as a way of lowering the necessity for enforced energy cuts if vitality demand outstripped provide, resulting from Russia’s invasion of Ukraine.

Resulting sanctions on Russia’s gasoline exports threatened Europe’s access to gasoline provides.The community operator mentioned that there are “continued risks and uncertainties relating to the Russian invasion of Ukraine” this winter.”

5 July: Cornwall Issues Price Cap Forecasts Until June 2024

Energy corporations are being warned by their regulator, Ofgem, to retain income forward of paying shareholder dividends to assist them stay financially resilient in a unstable market, writes Candiece Cyrus.

Financial instability contributed to 30 suppliers folding in 2021/22, when wholesale vitality costs started to soar. The cost of transferring clients to different suppliers can be met by way of levies on buyer payments.

The taxpayer additionally carried the cost of supporting the collapsed agency Bulb – which was deemed too huge to fail – earlier than it was offered to Octopus final December.

Ofgem is eager to see monetary rigour within the administration of vitality corporations as wholesale costs fall and profitability returns to the market after 5 years of losses.

The regulator mentioned it expects corporations ‘to act responsibly and in the interests of their customers’.

The authorities can be eager to see households profit from the autumn in wholesale costs, which is mirrored within the latest update to Ofgem’s vitality value cap. On Saturday, it fell from £3,280 a yr for the common family to £2,074 a yr (see story under).

However, the efficient drop is from £2,500 a yr, because the cap was quickly outdated by the federal government’s vitality value guarantee.

Analyst Cornwall Insight has issued predictions for the value cap for This fall 2023 and the primary half of 2024. It says the cap will fall from £2,074 to £1,878 on 1 October earlier than rising to £1,917 on 1 January 2024. The estimate for 1 April 2024 is £1,888. The caps from October 2023 onwards are predicated on diminished annual common consumption figures issued by Ofgem final week (see story under). As ever, precise payments usually are not capped and can be decided by the volumes of vitality consumed.

As a results of cheaper vitality, business analysts anticipate suppliers to begin providing aggressive vitality offers once more throughout the coming weeks and months.

In a letter to suppliers this morning, Jonathan Brearley, chief govt of Ofgem, additionally mentioned the regulator will proceed to overview and update the value cap. It can be contemplating an alternative choice to the cap that can higher shield clients in unstable market circumstances.

It plans to place everlasting measures in place so households on prepayment plans pay not more than direct debit clients. Prepayment clients have historically paid extra, because of the extra administrative prices required to supply this cost technique.

However, as of 1 July, the federal government stepped in to cowl the distinction in prices for prepayment meter and direct debit clients, however the assist is barely resulting from final till April 2024.

The regulator can be:

reviewing [energy company] working prices, which account for a big portion of standing expenses added to each gasoline and electrical energy invoice
proposing to determine an allowance for suppliers to assist prepayment clients whereas reviewing comparable allowances for suppliers to assist different varieties of clients with unhealthy debt
asking suppliers to publish all their home tariffs for better transparency of offers available to clients
consulting on a brand new buyer requirements framework which is able to deal with these financially struggling and with vulnerabilities.

Vulnerable clients embrace the elderly, disabled and people with young youngsters. The regulator launched a voluntary code of observe in April, which all suppliers signed. This adopted stories of British Gas breaching Ofgem’s guidelines and forcibly becoming meters within the properties of vulnerable clients. Last week ofgem launched a statutory session to make the code of observe obligatory.

Mr Brearley mentioned: “An vitality sector the place firms could make an inexpensive revenue is necessary to create a sustainable and aggressive marketplace for shoppers. However, a return to the practices we noticed earlier than the vitality disaster isn’t on the desk – suppliers should reciprocate the assist the sector was given by shoppers and taxpayers when wholesale costs elevated by behaving responsibly as costs fall and income return.

“The vitality market has modified. Ofgem has launched main modifications to the market, and we want suppliers to study the teachings of the vitality disaster and play their half by ensuring they’re financially strong, can take in potential losses and are assembly our new capital necessities. I anticipate no return to paying out dividends earlier than a provider has met these important capital necessities.

“We will closely monitor the situation, including to make sure that the market is operating competitively on price alongside customer service and innovative products, and to make sure that suppliers are meeting their obligations to the most vulnerable.”

1 July: Customers Finally See Benefit Of Falling Wholesale Prices

Today sees the long-awaited discount within the vitality value cap, which governs how a lot clients might be charged for every unit of vitality they use, together with the related standing expenses.

Set by the market regulator, Ofgem, the cap now stands at £2,074. This is how a lot a family would pay annually if it used the common quantity of gasoline and electrical energy and paid its payments in arrears by month-to-month direct debit.

The cap doesn’t restrict the scale of payments, that are decided by precise consumption. The cap stage serves as an indicator of the prices more likely to be confronted by a typical family.

The value cap is revised every quarter to mirror modifications in wholesale vitality costs. The earlier cap stage, which took impact on 1 April, was £3,280.

However, since October final yr, the cap has been outdated by the federal government’s vitality value guarantee, which calculated the everyday annual invoice at £2,500. The guarantee was launched when it turned clear that rocketing wholesale costs would push the cap past £3,500.

As of at this time, the cap is as soon as once more in impact, bringing a discount on the federal government guarantee of £426 a yr. The guarantee will solely come again into play if the cap rises past £3,000. Analysts anticipate the cap to fall under £2,000 when it’s subsequent revised on 1 October.

Separate caps apply for many who pay in arrears by cheque or money and for these with prepayment meters.

For cheque and money clients, the cap has fallen from £3,482 to £2,211 for typical twin gas consumption. The extra prices mirror the upper prices incurred by vitality firms to manage these cost strategies.

For prepay clients, the cap has decreased from £3,325 to £2,077 for typical twin gas consumption, bringing it near the principle cap stage. The authorities insisted that the premium beforehand paid by prepay clients – once more, to cowl administrative prices – ought to successfully be faraway from at this time’s iteration of the cap stage.

Many prepay clients are deemed to be financially vulnerable.

Ofgem defines common family annual consumption as 2,900kWh of electrical energy and 12,000kWh of gasoline. From October, these figures can be set at 2,700kWh of electrical energy and 11,500kWh of gasoline, reflecting diminished ranges of consumption as financially-stretched households reduce on utilization and discover methods to be extra vitality environment friendly.

This change will scale back the determine quoted for the cap however, as famous, it doesn’t imply payments will essentially fall on the similar charge. Households will nonetheless be charged for vitality used, albeit at decrease unit charges and with decrease standing expenses.

From 1 July, the per unit stage of the value cap to the closest penny for a typical buyer paying by direct debit can be 30p per kWh for electrical energy clients and a standing cost of 53p per day.

The equal per unit stage for a typical gasoline buyer is 8p per kWh with a standing cost of 29p per day.

Analyst Cornwall Insight estimates that, on the premise of the brand new common consumption figures from October, the cap will drop to £1,871 a yr for a twin gas family based mostly on typical consumption when it’s reset. This is £107 decrease than its earlier forecast of £1,978.

It additionally expects the cap to rise to round £1,901 a yr for the everyday family in January 2024, chopping £103 off its final prediction of £2,004 a yr, once more due to the common consumption determine discount.

29 June: Households Using Less Energy To Trim Soaring Bills

Analyst Cornwall Insight says the vitality value cap, which is ready by regulator Ofgem to restrict family payments, ought to fall to a decrease stage than it first predicted in October this yr and January 2024, writes Candiece Cyrus.

The revision outcomes from modifications Ofgem has made to the way in which it calculates typical vitality consumption. It says households are utilizing much less gasoline and electrical energy due to excessive costs and improved vitality effectivity, so consumption figures should be diminished accordingly.

The cap refers back to the annual invoice a median family can anticipate to pay. Previously, this was calculated on the premise of two,900 kWh of electrical energy and 12,000 kWh of gasoline getting used. These figures have been revised all the way down to 2,700 kWh and 11,500 kW.

However, this doesn’t imply payments themselves will change. Ofgem has made no modifications to the per unit cost of gasoline or electrical energy, or to standing expenses, so households will proceed to pay for the vitality they use as at current.

From 1 July, the cap will stand at £2,074, which is down from the £2,500 vitality value guarantee imposed by the federal government since final October, when the cap topped £3,500.

Cornwall Insight predicts that the cap will drop to £1,871 a yr for a twin gas family based mostly on typical vitality consumption when it’s reset in October. This is £107 decrease than its earlier forecast of £1,978.

It predicts the cap will rise marginally to round £1,901 a yr for the everyday family in January 2024, chopping £103 off its final prediction of £2,004 a yr.

Dr Craig Lowrey, principal marketing consultant at Cornwall Insight, mentioned: “The fall within the common value cap predictions displays Ofgem’s efforts to align with the evolving vitality consumption patterns of typical households, as shoppers reply to excessive costs, vitality effectivity measures, climate circumstances and different influences by lowering their vitality utilization.

“While typical household predictions may provide some insight for consumers, households are still facing the challenge of bills that are well above historic levels. This situation brings us back to the question of the cap’s purpose – as doubts about the cap’s effectiveness in protecting consumers and its impact on tariff competition become a regular part of energy discussions.”

14 June: Regulator Tells Consumers To Think Before They Fix

Analyst Cornwall Insight is forecasting that the value cap that governs annual family vitality payments will fall to £1,933 for these with typical consumption in October earlier than edging as much as £1,944 in January 2024. The cap was final under £2,000 in September 2022.

At current, the cap – calculated every quarter by regulator Ofgem – stands at £3,280, having touched £3,550 in October 2022 and a peak of £4,279 in January this yr.

The fast improve within the cap stage prompted the federal government to introduce its Energy Price Guarantee (EPG), which has restricted common consumption family payments to £2,500 a yr since October 2022.

This guarantee will stop to use from 1 July, when the Ofgem cap will fall from £3,280 to £2,074.

The cap is tumbling due to a drop in wholesale costs, which in flip have diminished as a result of vitality firms have sourced various sources of provide to these disrupted or ‘choked off’ by the battle in Ukraine and related sanctions on Russian gasoline and oil.

Market watchers are speculating that the autumn within the stage of the cap will immediate some suppliers to reintroduce fixed-term, fastened value tariffs, which have been almost totally absent from the marketplace for the previous 18 months due to spiralling wholesale costs.

Fixed vitality offers – normally 12 or 24 months in period – hinge on the provider with the ability to purchase gas at a assured value throughout the time period. They lock within the value per unit of gasoline and electrical energy for the client, however precise payments are decided by the quantity of vitality used.

The benefit of fixing is that the client is protected against rising costs whereas the repair is in place.

However, if the day-to-day value of vitality falls, the client can be marooned on the fastened value and unable to profit. Most fastened tariffs carry exit charges for these wanting to depart the deal early – these might be as excessive as £75 per gas.

Ofgem has used social media to induce these contemplating a set tariff to proceed with warning. It mentioned:

“THINK BEFORE YOU FIX: Fixed-rate energy tariffs have seen a return to the market but check if they are right for you. Prices are still unpredictable and signing up for a fixed rate now might mean you miss out if prices fall in the future.”

12 June: Small Business Group Wins ‘Blend & Extend’ Promises

The Federation of Small Businesses says EDF is becoming a member of the ranks of vitality suppliers that can enable small business purchasers trapped on high-cost fastened tariffs to regulate their contracts to avoid wasting money.

The French-owned agency follows within the footsteps of British Gas, Engie and Drax in committing to the Federation’s ‘Blend & Extend’ initiative, which sees businesses that locked into excessive costs final summer season in a position to lengthen their contracts to be able to unfold the upper prices over an extended interval.

Current decrease vitality costs can even feed into the calculation, serving to to convey the general cost down.

Tina McKenzie, head of coverage on the Federation, commented on the British Gas announcement final month, which sees a 12-month extension to tariffs: “Allowing small businesses to come back out from the vitality contracts they fastened throughout market peak final yr is important to their survival.

“British Gas is doing the right thing to adopt our call and give small businesses the option to ‘blend and extend’. We hope this is made available to all small business customers who are trapped in fixed tariffs from last year’s peak period. Now is the time for other suppliers to follow suit.”

British Gas can be distributing grants price £15 million to small businesses going through extreme monetary pressures.

In a remark reported within the Guardian, a Federation spokesperson mentioned it is going to proceed to scrutinise vitality corporations: “This [Blend & Extend initiative] is a major step forward and a tangible win, but the devil will be in the detail to ensure that the promised contracts do indeed match a reasonable price, so we will be checking on the first contracts to make sure.”

Commercial vitality contracts are almost at all times organized on a set time period, fastened charge foundation, with hefty monetary penalties for businesses that want to break the contract early.

31 May: Prepay Customers Urged To Redeem By End Of June

The authorities is urging households with conventional prepayment meters to make use of their vitality invoice assist vouchers by the deadline of 30 June, writes Candiece Cyrus.

It launched the Energy Bill Support Scheme final October to supply £400 of assist over the six months to March, paid in instalments of £66 and £67.

Those on conventional prepayment meters have been despatched vouchers within the put up or by e-mail that might be redeemed on the Post Office, or within the 28,000 UK shops with PayPoint providers, as much as 90 days from their difficulty date.

Over 83% of vouchers price £650 million have been claimed, however £130 million-worth nonetheless should be redeemed by the tip of June.

Charities and vitality suppliers are working with the federal government to encourage these entitled to the funds to make use of their vouchers.

Adam Scorer, chief govt of gas poverty charity National Energy Action mentioned: “Some customers didn’t receive them, others struggled to redeem them.”

Matthew Cole, head of Fuel Bank Foundation, a charity that gives emergency gas vouchers to prepayment meter clients, mentioned: “We found that reasons why vouchers haven’t been redeemed include people not receiving them, due to incorrect details or the person having moved house and their records not being updated, or they lost or deleted the voucher.”

Lost, lacking or expired vouchers might be reissued, so long as they’re redeemed by 30 June 2023. Anyone with a conventional prepayment meter who hasn’t obtained their vouchers, is not sure how one can redeem them, or wants one to be reissued, is being advised to contact their provider for assist.

Ofwat, the water sector regulator, says 23% of invoice payers are struggling to pay their water invoice. This compares to twenty% of invoice payers in October 2022, and 15% in March 2022.

It provides that solely round 30% of shoppers are conscious that monetary assistance is available from water corporations whereas, out of those that have reported ‘struggling all the time’ with family payments, solely 15% have reported having obtained assist from their water provider.

The share of invoice payers who report ‘never’ having struggled to pay a family invoice has fallen from 45% in 2021 to 25%.

Ofwat has known as on water firms to “continue stepping up and supporting customers who are struggling financially.” Information on assist from water corporations is on the Ofwat website.

25 May: Cap Drop Reflects Reduction In Wholesale Prices

As broadly predicted, the vitality value cap set by Ofgem, the market regulator, will fall as of 1 July, from £3,280 to £2,074. It will decide the cost of vitality for households in England, Wales and Scotland till the tip of September. A brand new cap will then take impact from 1 October.

At current, home payments are ruled by the Energy Price Guarantee, which was launched by the federal government final autumn when the Ofgem cap soared past £3,500. This guarantee stands at £2,500, however can be outdated by the brand new cap.

The stage of the cap relies on typical use of a median family on their provider’s normal default tariff. It caps what suppliers can cost for every unit of vitality consumed, together with any standing cost, and isn’t a cap on complete payments – households nonetheless pay for the vitality they use.

From 1 July the per unit stage of the value cap to the closest penny for a typical buyer paying by direct debit can be 30p per kilowatt hour (kWh) for electrical energy clients and a standing cost of 53p per day. The equal per unit stage for a typical gasoline buyer can be 8p per kWh with a standing cost of 29p per day.

Analysts anticipate the October cap to dip under £2,000 earlier than edging above that determine at first of 2024. However, the precise stage of the cap is decided by wholesale costs within the weeks previous to it being introduced, so there isn’t any certainty in these predictions.

The discount within the cap in July will result in decrease typical family payments than at current, however as just lately as March 2022, the vitality value cap was simply £1,277 a yr, and this time final yr it was nonetheless below £2,000, at £1,971. A cap greater than £2,000 is subsequently costly in historic phrases.

As reported under, analyst Cornwall Insight doesn’t anticipate family payments to return to pre-pandemic, pre-Ukraine warfare ranges till the tip of the last decade.

The decrease stage of the cap – which displays decrease wholesale vitality costs – might set off the reemergence of tariff switching, with households in a position to store round for cheaper offers. If this occurs, aggressive fixed-rate, fixed-term (12 month) presents could also be seen from late June onwards.

Prior to the vitality market seizing up in 2021/22, round six million households switched vitality tariff yearly.

July can even see clients on prepayment meters charged the identical unit charges for gasoline and electrical energy as those that pay their payments in arrears by direct debit. At the second, prepayment payments are greater to account for administration and servicing prices, however the authorities has directed that this premium needs to be eliminated.

18 May: Cornwall Insight Estimates Cap To Sit At £2,053

Energy market regulator Ofgem will reveal the latest iteration of its value cap on Thursday 25 May, overlaying the interval from July to the tip of September.

Cornwall Insight, the market analyst, is forecasting that it’ll fall to £2,053 a yr for a family with typical ranges of consumption, paying in arrears by direct debit – however precise payments at all times mirror the quantity of vitality used.

The cap presently for typical utilization stands at £3,280 however is anticipated to fall due to tumbling wholesale vitality costs, specifically pure gasoline.

At the second, the cap has no relevance to payments as a result of it’s greater than the separate authorities value guarantee, which limits common annual payments to £2,500. However, if the cap falls under the extent of the guarantee, suppliers must set their costs at or under the cap stage, elevating the prospect of decrease payments than at current from July onwards.

It can be doable that suppliers would possibly begin competing for business on the again of falling wholesale costs. There have been no switching tariffs available on the open marketplace for properly over a yr.

Cornwall Insight’s prediction for the Ofgem cap for October to December is that it’ll fall to £1,975, rising to £2,044 within the first quarter of 2024. The image trying additional forward stays unclear as a result of wholesale costs might rocket once more within the wake of unexpected worldwide turmoil.

The analyst commented: “Despite the cap falling (in July) from the sky-high costs of the previous two years, the determine stays over £1,000 per yr greater than the value cap ranges seen previous to the pandemic.

“We don’t presently anticipate payments to return to pre-2020 ranges earlier than the tip of the last decade on the earliest.

“However, we hope to see the reappearance of extra aggressive fixed-rate vitality tariffs as costs begin to stabilise, offering shoppers with extra choices to handle their vitality prices.

“Prices remain subject to wholesale energy market volatility, and our reliance on energy imports means geopolitical incidents could still have a significant impact on energy prices.”

18 May: Firms Provide Refunds After Breaching Price Limits

Customers of Good Energy and OVO Energy who have been overcharged to the tune of £2.7 million are to be refunded and compensated, writes Candiece Cyrus.

This follows an investigation by business regulator Ofgem that discovered that, between October 2022 and March 2023, almost 11,000 OVO Energy clients have been overcharged a complete of just below £1.5 million.

It additionally discovered that, between January 2019 and October 2022, just below 7,000 Good Energy clients have been overcharged by almost £400,000.

The OVO Energy clients can be mechanically refunded and obtain compensation totalling a median of £181 every. Overcharged Good Energy clients will mechanically obtain a refund and compensation averaging £109 every.

The clients have been overcharged relative to Ofgem’s vitality value cap or the federal government’s vitality value guarantee, which is quickly changing the cap to maintain costs extra reasonably priced. Suppliers are obliged to set their costs at or under the extent of the cap or guarantee, whichever is in impact on the time.

Dan Norton, Ofgem’s deputy director of retail, mentioned: “Protecting shoppers is at all times our prime precedence, and we anticipate suppliers to make sure clients pay not more than the extent of the value cap or vitality value guarantee – schemes put in place with the very objective of serving to individuals.

“It is completely unacceptable that Good Energy and OVO Energy clients have been overcharged, significantly at a time that’s already so difficult and hectic for shoppers throughout the UK.

Energy suppliers ought to hear this loud and clear: we anticipate suppliers to behave with the utmost care and integrity. We will proceed to carry them to account if they don’t meet their buyer safety or reporting obligations.”

Good Energy and OVO Energy can even pay £1.25 million and £10,000 respectively to Ofgem’s redress fund, which helps clients in vulnerable circumstances.

Ofgem says OVO Energy’s contribution would have been significantly greater had it not notified the regulator of its overcharging difficulty and resolved it in good time.

Good Energy has submitted an enchancment plan, on the request of the regulator, to make sure it places measures in place to stop overcharging sooner or later.

The agency, together with E.ON Next and Octopus Energy, has additionally been fined by Ofgem for failing to ship a remaining invoice or compensate clients who switched to a different supplier. It has been ordered to pay 350 former clients a complete of £18,000 (see update under).

17 May: E.On Next, Octopus, Good Energy Missed Deadlines

Three vitality suppliers have paid £8 million in fines for failing to compensate former clients on time.

Suppliers are obliged to get a remaining invoice out to clients who’ve switched to a different supplier inside six weeks, as set out within the Guaranteed Standards of Performance (GSOP) laws launched in May 2020.

Those who fail to ship the payments inside six weeks should pay £30 in one-off compensation to affected clients. If payments fail to reach inside an additional 10 working days, clients are entitled to an additional £30.

Energy regulator Ofgem advised E.On Next to pay £5.5 million to almost 95,000 clients, Octopus Energy to pay £750,000 to 19,000 clients and Good Energy to pay 350 clients a mixed complete of £18,000.

Ofgem says not getting a remaining invoice in a well timed method can lead to shoppers being incorrectly arrange on the new provider, being in debt on the old provider and receiving a big, surprising invoice.

The watchdog discovered the three suppliers both missed or unduly delayed £6,305,925 price of compensation funds owed to greater than 100,000 clients.

This is the primary time Ofgem has enforced GSOP guidelines. Neil Kenward of Ofgem mentioned: “Ofgem launched these requirements to ensure clients get the service they deserve when switching vitality suppliers.

“Our guidelines imply that, the place vitality firms drag their heels, clients are mechanically compensated. We gained’t hesitate to carry vitality firms to account, as we’ve completed at this time.

“As the energy market starts to recover, we’ll likely see a return to more switching, and this action is a reminder to suppliers that they need to make switching as easy and convenient as possible for their customers, and where they cause undue delay, pay compensation swiftly.”

Suppliers paid extra compensation of £1.7 million to clients or the Energy Industry Voluntary Redress Scheme (EIVRS), which helps vulnerable shoppers. This included £1.3 million from E.On Next in recognition of system failings and compensation delays.

Ofgem says all three suppliers have now up to date their billing processes and programs to make sure funds will now be made in step with the laws.

12 May: Affordability Issues Dog Upgrades To Housing Stock

Citizens Advice is warning that almost all of properties would require some stage of vitality effectivity upgrade, costing a median of £15,000, if the UK is to attain internet zero carbon emission standing by 2050, writes Candiece Cyrus.

It says most households that aren’t eligible for presidency assist by way of, for instance, the Boiler Upgrade Scheme, are going through monetary obstacles to creating the mandatory modifications.

Applicants for the scheme should be qualifying property homeowners with a Energy Performance Certificate (EPC) that has no excellent loft or cavity wall insulation suggestions. Grants of as much as £6,000 in the direction of warmth pumps and biomass boilers.

Following a survey of 12,000 householders in England and Wales, Citizens Advice discovered that round 90% of respondents cited the cost of home enhancements, from the set up of flooring and wall insulation to the becoming of double or triple glazed home windows, as a barrier to having the work completed.

Fewer than 20% of respondents mentioned they’d be capable of afford a warmth pump, which prices a median of £10,000, with out borrowing money, whereas fewer than 20% have been keen to borrow money by way of a mortgage or unsecured mortgage to fund enhancements.

Aside from the monetary implications, most respondents weren’t focused on making any vitality environment friendly upgrades to their home. Only 40% indicated an curiosity, with most displaying desire for measures akin to loft insulation and double or triple glazing over putting in a warmth pump, strong wall insulation and cavity and flooring insulation.

The same quantity mentioned they’d contemplate paying for vitality environment friendly measures after they have been advised it might save the common family £300 on their annual vitality invoice, displaying the necessity for incentives.

Around 30% of respondents have been involved concerning the effectiveness and suitability of any measures taken.

The survey additionally revealed that age performs a job in householders’ enthusiasm in the direction of home enhancements. Respondents aged 18-34 have been almost thrice extra more likely to be focused on putting in a warmth pump than householders aged over 55.

According to the Energy Saving Trust, fewer than 250,000 of the UK’s 29 million properties have warmth pumps, however the authorities expects that thousands and thousands extra can be wanted over the following 10-15 years to fulfill its internet zero targets.

9 May: Analyst Sees Competition Return As Market Stabilises

Analyst Cornwall Insight says vitality corporations might begin providing fixed-rate, fixed-term offers from July as wholesale costs stabilise at decrease ranges than have been seen for over 18 months, writes Candiece Cyrus.

Competitive fastened offers have been just about nonexistent for the reason that market was thrown into disaster forward of Russia’s invasion of Ukraine in February final yr and the following sanctions placed on Russia’s gasoline exports.

Wholesale costs rose steadily in 2021 as fears of battle grew, and over two-dozen vitality suppliers went out of business.

However, a mixture of a gentle winter and diminished buyer demand in 2022/23 has led to greater than predicted European storage ranges, which has helped to decrease considerations over vitality provide and curb market volatility.

At current, the federal government’s Energy Price Guarantee, which was launched in October final yr to assist households with hovering vitality payments, limits the quantity corporations can cost their clients per unit of vitality, and in standing expenses, at £2,500 per yr for the common family.

It overrides the value cap, set quarterly by vitality regulator Ofgem, which normally limits how a lot vitality corporations can cost their clients per unit of vitality and in standing expenses based mostly on wholesale costs.

Energy suppliers are presently setting their costs as regards to the guarantee. However, from July, the Ofgem value cap is more likely to undercut the federal government guarantee, at which level corporations will solely be capable of supply tariffs at or under the cap.

Cornwall Insight predicts the cap will fall to £2,063 per yr for a median family, for the interval between July and September, from its present stage of £3,280. It says the cap ought to stay comparatively steady heading into subsequent yr, rising to £2,098 per yr between October and December, after which to £2,162 per yr between January and March 2024.

While fastened offers may also help vitality clients handle their payments higher, as their per-unit charges will stay the identical over the deal time period (normally 12/ 24 months), they need to notice that there’s a threat of shedding out on paying much less if wholesale vitality costs fall throughout this era.

Dr Craig Lowrey at Cornwall Insight says: “As the wholesale vitality market has levelled out in recent weeks, our predictions for the value cap have adopted go well with. Some vitality suppliers will probably look to leverage this chance to convey again fastened tariffs on or across the value cap, with steady projections decreasing considerations they’ll lose out over the fastened time period.

“This potential re-emergence of competitive tariff propositions presents an opportunity for households to finally get a grip on their energy bills, having been hit hard by the energy crisis. While this seems positive, fixing energy tariffs is a gamble, the market may go down as well as up, and households run the risk of getting locked into bills higher than the price cap.”

Regulator Ofgem has tweeted out the message THINK BEFORE YOU FIX at this time, including: “Fixed-rate energy tariffs might be appearing back on the market but check if they are right for you. Prices are still unpredictable and signing up for a fixed rate now might mean you miss out if prices fall.”

24 April: ‘Tell Us Once’ Principle Across Range Of Providers

Energy regulator Ofgem is proposing the creation of a common joint precedence providers register that might allow vulnerable households on sure means-tested advantages to enroll as soon as to obtain further assist from utility corporations, writes Candiece Cyrus.

At current, clients want to enroll to every firm’s register individually. Ofgem’s proposed joint register would unify current databases vitality corporations and different utility providers, together with water suppliers.

Customers are deemed vulnerable resulting from elements akin to their age, sickness, a incapacity or having young dependents of their family.

Customers formally recognized by a agency as vulnerable are supplied with extra help akin to:

precedence assist in an emergency, which incorporates advance discover of scheduled energy cuts
the supply of scorching meals
a nominee scheme which permits a member of the family of the client’s option to obtain their payments and cope with suppliers on their behalf
an identification and password scheme to establish real employees once they name at their home.

Jonathan Brearley, Ofgem’s chief govt, commented: “Our guidelines clearly require suppliers and community firms to make use of their precedence providers register to supply applicable assist to clients. This is a particularly necessary a part of the licence circumstances and we are going to reply robustly if this isn’t the case.

“We ought to all contemplate building in the direction of a joint register, not simply between water and vitality, however together with wider sectors and probably native and nationwide authorities, akin to information held by the Department for Work and Pensions.

“Ideally, this joint register would be based around a ‘tell us once’ principle – where families who have vulnerabilities tell one agency about this and, with permission, this is shared across the others with a single, reliable source of data to anticipate, identify, and respond to the needs of those customers.”

The vitality regulator says corporations usually are not doing sufficient to tell their clients concerning the assist they might obtain if vulnerable. Only one in three clients are conscious of a precedence providers register, in line with its analysis, and of those that are conscious, a considerable minority who might be eligible for assist based mostly on their circumstances, usually are not on it.

Dr Elizabeth Blakelock, principal coverage supervisor at Citizens Advice, tweeted: “No single regulator can make this happen – they only have the ability to direct the firms in their sector. So we need the government to set up a taskforce to agree the scope of this system and ensure firms participate.”

18 April: Campaigners Insist Wider Protections Are Required

Ofgem, the vitality market regulator, at this time launched a Code of Conduct for vitality suppliers, outlining how they need to conduct involuntary – or pressured – prepayment meter (PPMS) installations, writes Bethany Garner.

The purpose is to restrict installations at vulnerable households, with an outright ban on excessive threat people (see under).

Involuntary PPM set up is often used as a final resort for purchasers who fall into vital arrears on a regular vitality meter. But in recent months suppliers together with British Gas, Scottish Power and Ovo have come below fireplace for pressured installations in properties occupied by ‘vulnerable’ clients, together with the elderly – which isn’t permitted.

The difficulty got here to mild when The Times reported cases of provider representatives breaking into properties to vary the meter.

There has been a short lived ban on pressured installations for the reason that story broke in March. They will restart in May, in permitted circumstances, with suppliers having to fulfill a variety of standards earlier than continuing.

The code, developed in session with Citizens Advice, Energy UK and different stakeholders, will take impact from at this time. All vitality suppliers in England, Scotland and Wales have signed up.

It bans suppliers from forcing PPM set up for purchasers Ofgem considers ‘high risk’.

This class contains adults aged 85 and over, people with extreme or terminal diseases, and those that want a constant electrical energy provide for medical causes. These people might depend upon electrically powered tools akin to ventilators or dialysis machines.

The Code additionally clarifies the circumstances below which pressured PPM installations can nonetheless be made.

Suppliers can’t set up a PPM except the client hasn’t paid their invoice for no less than three months, or has excellent debt of no less than £200 per gas.

If the client has already organized a debt reimbursement plan, the provider can’t set up a PPM with out their consent.

While clients within the ‘high vulnerability’ group are shielded from involuntary set up altogether, people classed as ‘medium risk’ can be thought-about on a case by case foundation earlier than pressured set up takes place.

This group contains households with youngsters below 5, elderly adults (over 75) and people with severe bodily or psychological well being circumstances.

Our vitality spokesperson, Kevin Pratt, mentioned: “It is welcome news that the welfare of those deemed high risk will be safeguarded by the new rules, but charities are concerned that others – those under 85 and some people with serious illnesses or young children – may literally be left out in the cold because forced installations will still be permitted.”

Caroline Abrahams, charity director at Age UK, mentioned: “It’s good to see some regulation coming in to begin to rein within the observe of forcibly putting in pre-payment meters, which has beforehand been one thing of a Wild West, however these new guidelines don’t go far sufficient.

“We don’t assume any older person needs to be subjected to this therapy, not solely the over-85s and the over-75s who’re deemed vulnerable not directly, partly as a matter of precept but in addition due to considerations about how efficient the evaluation of vulnerability can be.

“The risk is that some older people – and younger ones too – who should definitely not be on a pre-payment meter end up on one.”

The Code of Practice additionally stipulates that:

Before forcibly putting in a PPM, suppliers should perform a ‘site welfare visit’ to evaluate whether or not the machine is appropriate for the family, and whether or not any occupants needs to be thought-about ‘vulnerable’.
During these visits, the provider’s consultant should use an audio recording machine or physique digicam – which should even be worn throughout PPM installations.
If a provider goes forward with pressured PPM set up, they need to use a sensible meter at any time when doable.
All new PPMs should be put in with £30 credit score, which is added to the client’s excellent vitality debt.
Once the meter is put in, suppliers should try and contact the client inside 72 hours to make sure they know how one can use it.

Mr Pratt added: “The root of the issue is just that vitality is simply too costly. That’s why households fall into unmanageable arrears on their normal meter payments and find yourself being pressured onto a prepay association. But we’re solely going to deal with that by way of radical motion such because the introduction of a social tariff that subsidises costs for these deemed most vulnerable.

“For that to happen, we need buy-in from the regulator, suppliers and, crucially, the government, and other billpayers will need to accept that a social tariff will effectively be funded by everyone’s energy bills. But unless there is deep structural reform to the beleaguered energy sector, supported at a societal level, it is hard to see how contentious issues such as clumsy and cruel forced meter installations are going to be resolved.”

If a provider installs a PPM in a means that breaks the Code, the machine should be eliminated, and the client could also be eligible for compensation.

Customers who consider their provider has breached this code can contact the Energy Ombudsman.

31 March: Analysts Says Business Energy Costs Set For 133% Rise

Analyst Cornwall Insight is predicting that Ofgem’s vitality value cap, which ordinarily limits what suppliers cost households per unit of vitality and for standing expenses, will drop to £2,024 a yr in July and £2,076 a yr in October for a family with typical vitality consumption, writes Candiece Cyrus.

This is greater than its estimates introduced final week, of £2,000 a yr for July and £2,023 a yr for October, indicating continued volatility within the wholesale vitality market.

The cap for the interval April to June is £3,280, having stood at £4,270 within the first quarter of the yr.

The cap isn’t presently utilized to family payments as the federal government’s Energy Price Guarantee, launched in October final yr, caps payments at £2,500 a yr for the everyday family. It will stay at this stage till 31 March 2024.

Once the cap falls under the extent of the EPG, the latter will change into defunct and the cap can be utilized to family payments as soon as once more. While it might mark a big discount in payments, it might nonetheless be significantly greater than the cap stage earlier than 2021.

Mr Lowrey mentioned: “The vitality market has been on a troublesome journey over the previous three years, with shoppers having confronted vitality payments at ranges by no means skilled earlier than.

“Our forecasts for the second half of 2023 present the prospect of a extra steady vitality local weather, which all being equal, will see vitality payments proceed their downward trajectory. However, within the short-term they nonetheless stay properly above historic highs.

“Of course, we must never take anything for granted, and as quickly as they fall, global shocks and our reliance on energy imports could see the energy market, and subsequently bills, rise yet again.”

Huge will increase in retailer for business customers

Cornwall Insight additionally says businesses that needed to repair their vitality payments when wholesale costs peaked in August final yr will see an increase of as much as 133% of their electrical energy payments from tomorrow.

Most business vitality tariffs have a set period, with corporations solely in a position to change suppliers throughout a ‘renewal window’ in the direction of the tip of the time period. This means they’re on the mercy of prevailing market costs at that time.

Cornwall Insight says the hike in costs is because of a reduce within the authorities’s assist for businesses, with the Energy Bill Relief Scheme being changed with the much less beneficiant Energy Bill Discount Scheme (EBDS) 1 April.

The analyst’s announcement follows a warning from the Federation of Small Business, that elevated vitality costs might pressure 370,000 corporations to downsize, restructure, or at worst, shut (see story under).

Under the brand new scheme, which runs till 31 March 2024, businesses will obtain a much-reduced low cost on the unit value of their gasoline and electrical energy as soon as wholesale costs attain a sure threshold. Firms which might be heavy vitality customers, in any other case generally known as Trade Intensive Industries or ETIIs, might want to apply for a bigger low cost.

Dr Craig Lowrey at Cornwall Insight mentioned: “The impact of EBDS on businesses is not uniform and will vary significantly across sectors. Energy-intensive industries that will receive additional support under EBDS may experience greater financial stability, while vulnerable businesses, some already struggling post-pandemic, may find reduced support levels and expensive fixed contracts a tough pill to swallow.”

30 March: Small Firms Face Stark Choices As Bills Set To Rocket

The Federation of Small Businesses is warning that this weekend’s modifications to authorities subsidies for business vitality prices might result in 370,000 corporations being pressured to make basic modifications to their operations, together with closure in some circumstances.

On Saturday 1 April, the Energy Bill Relief Scheme (EBRS) can be changed with the Energy Bills Discount Scheme (EBDS).

The new scheme, which is able to run till 31 March subsequent yr, offers non-domestic vitality customers with a reduction on the value of every unit of vitality they use. This kicks in when the value per unit reaches a sure threshold, and is proscribed to a set quantity.

For most non-domestic vitality customers in Great Britain and Northern Ireland these threshold costs and most reductions have been set at:

electrical energy: £19.61 per megawatt hour (MWh) with a value threshold of £302 per MWh
gasoline: £6.97 per megawatt hour (MWh) a value threshold of £107 per MWh.

Businesses that are extremely depending on electrical energy and gasoline utilization, generally known as Energy and Trade Intensive Industries or ETIIs, will be capable of apply for a bigger low cost to a most restrict, which is able to apply to 70% of their vitality volumes.

For electrical energy, the utmost low cost can be £89 per MWh with a value threshold of £185 per MWh. For gasoline, £40 per MWh with a value threshold of £99 per MWh.

Suppliers will mechanically apply the low cost to business vitality payments.

The FSB and different business teams say the assist supplied is considerably decrease than that supplied by the EBRS, which was launched in October final yr to supply a reduction from a wholesale unit value threshold of £211 per MWh for electrical energy and £75 per MWh for gasoline.

According to the FSB, 340,000 small businesses that fastened their vitality payments final yr, when wholesale costs have been at their highest, will see their payments rise in some circumstances by many hundreds of kilos.

It says a pub that makes use of 48,000 kWh in electrical energy and 192,000 kWh in gasoline yearly, which moved on to a brand new vitality tariff in August final yr, would have seen its estimated £85,000 annual vitality invoice diminished by £60,000 below the EBRS, which ends on 31 March.

From 1 April, below the EBDS, it might solely obtain simply over £2,000 in assist, leaving it with £83,000 nonetheless to pay in vitality prices.

The FSB is subsequently calling for a ‘Help to Green’ scheme as a long-term answer to assist businesses with excessive vitality prices. It would offer small businesses with a £5,000 voucher for investing in energy-saving and even energy-generating measures. This contains top quality insulation, photo voltaic panels and warmth pumps.

It additionally has known as for suppliers to be sympathetic to businesses and supply an ‘extend and blend’ method to tariff presents, permitting businesses on costly tariffs to profit from a fall in wholesale vitality prices since January this yr.

However, as suppliers purchase months prematurely, at this time’s costs nonetheless mirror the upper bulk prices paid final yr.

Tina McKenzie, coverage chair of the FSB, mentioned: “The bounce in vitality payments on April Fool’s Day gained’t be a laughing matter however can be a shock to a whole lot of hundreds of small businesses, who signed as much as fastened contracts when the federal government low cost was assured below EBRS.

“Some 370,000 small corporations may be pressured to think about downsizing, restructuring or closing as it’s unimaginable to cross on the complete prices to clients, who can not all of the sudden afford to pay £25 for a pizza or see the value of a pint double.

“There’s much that could and should be done rather than leaving small firms high and dry. Allowing the most vulnerable small businesses to renegotiate or ‘blend and extend’ their energy contracts to better reflect lower wholesale energy prices is the least the government and energy suppliers could do.”

27 March: Firms Urged To Encourage Voucher Use

Figures printed by the Department for Energy Security & Net Zero at this time present that three vitality firms – British Gas, Scottish Power and Ovo Energy – accounted for 70% of pressured prepayment meter installations in 2022, writes Candiece Cyrus.

In complete, 94,201 prepayment meters have been force-fitted below warrant final yr, with the three firms above accountable for 66,187.

Energy firms have historically utilized to the courts for permission to enter a property utilizing a warrant to be able to change the occupant’s meter, normally as a final resort due to vital arrears.

However, the observe has come below the highlight following revelations by The Times that British Gas was forcibly becoming meters in properties occupied by ‘vulnerable’ clients, together with the elderly, which isn’t permitted.

As a end result, Grant Shapps MP, vitality safety secretary, suspended the force-fitting of prepayment meters till 31 March. Ofgem has since prolonged the suspension till it’s glad firms are abiding by a revised code of conduct.

The Chancellor additionally introduced in his Budget on 15 March that households on prepayment meters will not have to pay greater than others for his or her vitality from July. At current, prepayment expenses are greater to mirror the cost of administering the system.

In its evaluation of the 2022 figures, the Department for Energy singles out Scottish Power because the ‘worst offender’ when evaluating the quantity of meters force-fitted (over 24,300) relative to its buyer base. The authorities says this equated to 500 installations per 100,000 meter factors.

British Gas forcibly fitted 25,000, whereas for Ovo Energy the determine was over 16,000.

This compares to round 10,000 by E.ON, 7,000 by EDF and 4,000 by Shell. Both Utilita and Bulb forcibly fitted over 2,000, and there have been 1,500 by Utility Warehouse, simply over 100 by Tru Energy and fewer than than 100 by Ecotricity, Good Energy and Octopus.

Mr Shapps final month mentioned at this time: “Today’s figures give a transparent and horrifying image of simply how widespread the pressured set up of prepayment meters had change into, with final yr seeing a median of over 7,500 force-fitted a month.

“After my requires change, I’m happy that suppliers have made their actions public and agreed to place a cease to forcing prepayment onto vulnerable clients for good – however this can not occur once more.

“I will be watching Ofgem’s ongoing review closely so customers get the support they need – and those vulnerable consumers who have wrongly suffered forced installations get the justice they deserve in the form of redress.”

Mr Shapps additionally urged suppliers to assist households on conventional prepayment meters to access the two.1 million vouchers but to be claimed below the federal government’s Energy Bills Support Scheme.

An growing variety of these with conventional prepayment meters have been redeeming their vouchers – as of February, 7.6 million vouchers had been redeemed by two million households. The share of redeemed vouchers has been steadily rising, reaching 76% in January and 78% in February.

The vouchers have supplied £400 in the direction of family vitality payments in instalments over six consecutive months from October to March.

Suppliers ship clients on conventional prepayment meters their vouchers by put up, textual content, e-mail or as automated credit score on topping-up. They might be redeemed on the Post Office or within the 28,000 UK shops with PayPoint providers as much as 90 days from their difficulty date.

15 March: Prices Due To Fall In July As Lower Cap Kicks In

Ahead of this afternoon’s Budget, the federal government has confirmed that its Energy Price Guarantee (EPG) can be saved at £2,500 till the tip of June. It was scheduled to rise to £3,000 on 1 April.

The cost of subsidising home vitality payments has fallen, giving the Chancellor, Jeremy Hunt, scope to increase the measure in a transfer he says will protect a typical family from a £160 value improve.

The quoted EPG figures signify the annual invoice for a family with common consumption paying in arrears by direct debit. Those with prepayment meters pay barely extra below the EPG, however Mr Hunt can be utilizing the Budget to finish this differential in order that the so-called prepayment premium is eradicated.

This will save common consumption prepayment clients round £45 a yr when it comes into impact later this yr.

The authorities says that, if the EPG had not been launched in October to supersede the value cap operated by Ofgem, the market regulator, typical payments would have reached £4,279 a yr this winter.

The value cap, which is reviewed quarterly, will fall to £3,280 on 1 April, nonetheless greater than the EPG. However, the cap is forecast to fall to £2,013 in July, at which level suppliers can be required to supply tariffs that conform with the cap, reasonably than the EPG.

The steep fall in wholesale gasoline costs in recent weeks has not but been mirrored in family payments as a result of suppliers purchase prematurely – at this time’s payments nonetheless mirror the majority prices paid within the autumn.

But if wholesale costs proceed to fall, it’s thought we might even see the re-emergence of competitors between suppliers, with keenly priced tariffs getting used to encourage clients to change between corporations – a market phenomenon that hasn’t functioned for 18 months.

The EPG will stay in place till the tip of March 2024, reverting to £3,000 on 1 July. It will come into play as soon as extra if the Ofgem cap rises above this determine resulting from will increase in wholesale costs.

In addition to forecasting the cap to sit down at £2,013 from July to September, business analyst Cornwall Insight predicts will probably be at £2,002 within the fourth quarter.

Mr Hunt is anticipated to announce additional cost-of-living assist in his speech, together with extra assist with childcare prices for folks on Universal Credit.

No announcement has been made forward of the Budget relating to assist for business vitality shoppers, whose greater payments are inevitably being handed on within the type of greater costs.

Danni Hewson, head of monetary evaluation at AJ Bell, mentioned: “From local swimming pools to those industrial-sized greenhouses that grow our precious salad, energy costs have become enemy Number 1. This Budget might have been touted as one to stimulate growth but without extending help for business as well as households, growth might be difficult to incubate.”

14 March: Companies Must Comply With Code Of Practice

Energy regulator Ofgem has prolonged the ban on the pressured set up of prepayment meters past the tip of March.

The ban, which additionally applies to the distant switching of sensible meters to prepayment foundation, was launched final month by Ofgem, on the behest of Grant Shapps MP, vitality secretary. This adopted stories in The Times that British Gas had forcibly put in prepayment meters on the premises of vulnerable clients.

It subsequently emerged that different suppliers have been equally not treating their clients pretty with regard to transferring them onto prepayment meters to be able to restrict the arrears on their accounts (see tales under).

A code of observe is being drawn up to make sure clients’ pursuits are protected with regard to using prepayment meters.

Jonathan Brearley, Ofgem CEO, advised members of the cross-party Parliamentary Business, Energy & Industrial Strategy Committee of MPs that his precedence is to ensure the business will get its act so as: “Companies will only restart installations when and if they can establish that they are acting in accordance with the new code of practice.”

8 March: Govt Urged To Hold Price Guarantee At £2,500

Citizens Advice, the official advocate for vitality shoppers, is looking for the introduction of a cut-price ‘social’ tariff for hard-pressed households who meet the official definition of being in gas poverty, writes Candiece Cyrus.

Households that spend greater than 10% of their earnings, after housing prices, on vitality payments are deemed to be in gas poverty, with an estimated 10 million properties presently on this scenario.

The charity says this quantity will rise to 12 million households if the federal government’s Energy Price Guarantee is diminished on 1 April, as deliberate.

At current, the Guarantee subsidises payments so {that a} typical family is paying £2,500 a yr for its gasoline and electrical energy. This determine would rise to £3,000 – a 20% improve – from April if deliberate modifications take impact, though Citizens Advice says it’s broadly anticipated that the Guarantee will stay at £2,500 after in depth lobbying by charities and client teams.

An announcement on the way forward for the Guarantee is anticipated within the Budget subsequent week.

If the Guarantee weren’t working, typical vitality payments could be above £4,200 now and round £3,300 from April. Citizens Advice says households are paying twice as a lot for his or her vitality as they have been in 2021, with households on the bottom incomes spending greater than 50% of their earnings after housing prices on vitality payments in comparison with 34% in 2019.

The thought of a subsidised social tariff was put ahead by Keith Anderson of Scottish Power final yr. Ofgem, the market regulator, is analyzing how such a tariff would possibly function and, crucially, how eligibility could be decided (see tales under).

Citizens Advice says a social tariff might scale back payments based mostly on a family’s stage of earnings and vitality consumption, with common financial savings £381. Reductions might attain as much as £1,500 for households on the bottom incomes.

Dame Clare Moriarty, Citizens Advice’s chief govt, mentioned: “Energy affordability is a long-term downside that wants a long-term answer. A social tariff protects thousands and thousands of individuals from spending extreme quantities on their payments.

“High vitality prices have left too many individuals selecting between heating and consuming. Uncertainty over future excessive costs solely provides to the stress and fear felt in households throughout the nation.

“This policy helps make energy bills more affordable in the years ahead and supports the shift to warmer, safer homes that are ready for the net zero transition.”

The announcement of the social tariff proposal follows Age UK’s name for a ‘prepayment amnesty’, which might enable the 4 million UK households on prepayment meters to have their meters uninstalled free of charge and changed by a credit score meter.

According to Age UK, 25% of the 4 million households on a prepayment meter have an occupant aged over 60, and 85% of this group are in gas poverty and/or obtain advantages, which suggests they’re on the bottom incomes. The charity says it has been contacted by those that ‘self-disconnect’ as they can’t afford to prime up their meter.

27 February: Govt Urged To Ditch Hike As Cap Heads To £2,112 In July

Ofgem, the vitality regulator, has introduced that its value cap for the three months from April to June can be £3,280 a yr for a twin gas family paying by direct debit based mostly on typical consumption. It presently stands at £4,279 a yr.

The new cap won’t be used to find out family payments as a result of it is going to stay above the federal government’s vitality value guarantee, launched final October because the cap rocketed in response to rising wholesale costs.

At current, the federal government guarantee stands at £2,500 a yr (for typical households). It will rise to £3,000 on 1 April, the identical day the brand new Ofgem cap turns into efficient. This improve within the guarantee means family payments will rise by 20%.

Charities are calling on the federal government to keep up the guarantee at £2,500 to keep away from worsening the cost of residing disaster for shoppers already struggling to pay their payments.

The influence of vitality payments on family budgets can even worsen from April as a result of the ultimate funds of the £400 authorities vitality invoice low cost scheme – unfold over six month-to-month funds from October 2022 to March 2023 – can have been paid.

The cost to taxpayers of subsidising family vitality payments is successfully the distinction between the guarantee and the Ofgem cap. With the hole narrowing as wholesale costs fall, campaigners say the influence on the general public purse is lowering to the purpose the place it’s cheap to keep up the guarantee at £2,500.

They additional level to predictions that the Ofgem cap will fall additional in July when it’s subsequent revised. Analyst Cornwall Insight, which has a monitor report of precisely predicting actions within the cap (it estimated £3,294 for the April determine, simply £14 out), says July’s cap can be £2,112.

It additional predicts that the cap can be largely unchanged in October, at £2,118. It bases its forecasts on evaluation of present and ‘forward’ wholesale costs, the latter being the cost of securing future provides.

Once the cap falls under the extent of the guarantee, the guarantee will stop to function and suppliers can be obliged to cost at or under the extent of the cap.

That means the federal government would solely want to keep up the cap at £2,500 for 3 further months, after which the necessity to subsidise payments would finish.

An announcement about future authorities assist for home and business vitality is anticipated within the Budget on 15 March.

There have been solutions that the downward pattern in wholesale costs might see a return of tariff switching as suppliers reintroduce aggressive fixed-price offers.

21 February: Govt Tells Regulator Not To ‘Pull Any Punches’

Regulator Ofgem is looking for suppliers to think about providing compensation and the removing of prepayment meters (PPMs) the place they’ve been wrongly put in in clients’ properties, writes Candiece Cyrus.

Earlier this month, The Times revealed that British Gas has used extreme and inappropriate means when force-fitting prepayment meters, together with deploying locksmiths to achieve entry to the properties of vulnerable clients.

In response, Ofgem launched an investigation into the British Gas case and a overview of prepayment meter installations normally.

Following intervention by Grant Shapps MP, vitality secretary, suppliers agreed to pause the set up of prepayment meters till 31 March.

Commenting on Ofgem’s investigation, Mr Shapps mentioned on Twitter: “Forcing the vulnerable onto prepayment meters is a scandal. I’ve been clear I need to see redress for these wronged.

“It is right that Ofgem is now investigating. Tough action must be taken where this has happened – it cannot afford to pull any punches.”

Ofgem says corporations ought to use the time till the tip of March “to review all of their recent forced and remotely switched PPM installations, and consider if any need to be reversed, and compensation offered where the strict rules have not been followed.”

Remote switching entails altering a sensible meter electronically in order that it really works on a prepayment reasonably than credit score foundation.

Industry guidelines enable vitality suppliers to force-fit prepayment meters as soon as they’ve secured a court docket warrant. However, Ofgem states this could at all times be a final resort and shouldn’t be carried out if the client is deemed vulnerable, which incorporates having youngsters below 5, being pregnant, being of pension age or having a incapacity or psychological well being situation.

Jonathan Brearley, Ofgem’s chief govt, says suppliers might face fines if systemic issues are discovered with their PPM practices.

As a part of its overview, which can be full by April, Ofgem will look into what additional protections vitality clients may have surrounding prepayment meter set up, and the place the necessity for purchasers to be moved onto prepayment plans might be diminished.

As a part of its British Gas investigation it mentioned it is going to assess whether or not the provider has:

supplied its struggling clients with assist, akin to recommendation on how one can scale back prices, signposting to sources of debt help and various reimbursement choices, earlier than selecting to place them on prepayment plans
assessed whether or not it’s secure and fairly practicable to put in a prepayment meter and whether or not a buyer’s psychological capability and/or psychological state might trigger the set up of a prepayment meter to be severely traumatic, or make their situation considerably worse
taken all cheap steps to make sure that every consultant who visits a buyer has the mandatory expertise, together with the power to evaluate the security and practicability of putting in a prepayment meter, and assess the client’s psychological capability and psychological state on the doorstep
ensured all representatives are match and correct to enter a buyer’s home
handled clients pretty in accordance with Ofgem’s Standards of Conduct, and that its representatives behave in a good, sincere, clear, applicable {and professional} method.

20 February: July Cap To Undercut Govt Price Guarantee

Cornwall Insight has additional revised its estimate of the April iteration of the Ofgem vitality value cap, which can be confirmed by the regulator every week at this time.

The analyst is predicting the cap can be £3,294. As this can be above the extent of the federal government’s vitality value guarantee of £3,000 a yr for typical family payments, the cap won’t govern what individuals pay.

The value guarantee is presently £2,500, rising to £3,000 on 1 April – a 20% improve. March can even see the tip of the federal government’s phased £400 vitality invoice rebate scheme, including additional strain to family budgets.

Cornwall Insight says the quarterly-updated cap will fall under the extent of the value guarantee in July, saying the cap will then stand at £2,153.34. The forecast for October’s cap is £2,161.05.

Once the cap is under the guarantee, the federal government will not subsidise vitality payments and suppliers can be required to supply tariffs at or under the extent of the cap.

This raises the prospect of shoppers with the ability to change to aggressive offers if suppliers resolve to create engaging fixed-term offers to seize market share.

However, it needs to be recalled that, even at £2,150 or thereabouts, the cap in July would nonetheless be almost £1,200 greater than in July 2022, when it stood at £1,971, once more for households with common consumption.

Falls within the stage of the cap mirror the decrease costs vitality corporations are paying on wholesale market to safe future provides. Prices are falling as international locations supply alternate options to Russian pure gasoline.

The cap will stay excessive for the quick future to mirror the upper costs already paid by corporations for the gas they’re supplying for the time being and till the summer season.

15 February: Wholesale Price Falls To Feed Through To Bills

Falling wholesale costs might see the return of competitors to the vitality market from July, enabling clients to change to cheaper offers, in line with business analyst Cornwall Insight.

In the years main as much as 2021, earlier than the present vitality disaster, round six million households a yr switched suppliers, normally transferring to fixed-rate tariffs lasting 12 or 24 months.

These have been priced under normal variable charge tariffs (SVTs), the value of which was capped from 2019 onwards by a value cap set by the market regulator, Ofgem.

However, as wholesale costs soared within the latter half of 2021 and into 2022, the availability of low-cost fixes dried up, and SVTs turned the least-expensive possibility. With all suppliers pricing their SVTs at or near the extent of the Ofgem cap, the motivation to change disappeared.

Since then, because the cap elevated in response to hovering wholesale costs, the federal government launched the Energy Price Guarantee (EPG), which is decrease than the Ofgem cap, and which suggests costs for every unit of vitality used are held at a given stage for all home clients.

Under the EPG, the common annual invoice for a typical family stands at £2,500. If the cap have been nonetheless in place, this determine could be £4,279.

However, the EPG common invoice will rise to £3,000 a yr from April as the federal government trims again assist. This will nonetheless be under the anticipated value cap at that time, however in July, the cap is anticipated to dip to round £2,360 – and vitality payments will then be required to mirror the extent of the cap, not the EPG.

Cornwall Insight commented: “There is an efficient probability that suppliers will be capable of supply fastened tariffs that compete with the capped authorities costs, reviving the advantages of switching suppliers.

“In analyzing the potential for switching, we notice that if the wholesale market volatility, as skilled in 2022, returns, it might change into uneconomic or impractical for suppliers to supply the form of aggressive tariffs in query.

“However, the current market conditions suggest there may be room for households to have a wider engagement in the energy market than they have in recent times.”

Price differentials between suppliers might emerge as a result of corporations purchase bulk vitality provides prematurely, at totally different occasions and costs. Some may select to undercut rivals to be able to safe market share.

10 February: Energy Secretary Says More Needs To Be Done

All vitality suppliers have agreed to cease forcefully putting in prepayment meters within the properties of vulnerable clients. The transfer is available in response to calls for from the federal government for change of their practices (see story under), writes Candiece Cyrus.

Grant Shapps MP, vitality secretary, wrote to suppliers final Sunday, requesting that they inform him how they’re supporting their clients and what number of warrants they’ve every sought to forcibly set up prepayment meters.

He set suppliers a deadline of final Tuesday to inform him how they’d rectify conditions for purchasers who shouldn’t have had prepayment meters put in, together with the cost of compensation.

Today’s announcement on the cessation of pressured installations follows Lord Justice Edis issuing instructions to magistrates courts to cease approving warrants earlier this week.

However, Mr Shapps says extra must be completed by business regulator Ofgem to supervise vitality corporations’ therapy of their clients. Ofgem mentioned it is going to ask clients about their experiences, reasonably than simply suppliers.

While all suppliers responded to Mr Shapps letter, with a number of outlining technique of redress for his or her clients, akin to compensation or changing a prepayment meter with a credit score meter, he mentioned a quantity failed to supply any particulars of their plans.

Ofgem requires suppliers to assist vulnerable clients who’re fighting their payments by, for instance, providing reasonably priced reimbursement plans, and solely placing them on prepayment meters as a final resort.

Vulnerable clients embrace the elderly, disabled, and oldsters with young youngsters.

A recent report in The Times revealed that British Gas has used locksmiths to achieve entry into properties to be able to match prepayment meters as a result of the occupants had fallen into arrears on their credit score meter.

Suppliers have additionally remotely switched sensible meters to prepayment mode.

Charity Citizens Advice has additionally been calling for a ban on pressured installations since final summer season after the variety of individuals it noticed who couldn’t prime up their prepayment meter surpassed ranges for the earlier 10 years mixed.

Mr Shapps says he’ll “continue to stand up for vulnerable customers who have had their homes invaded, and to ensure that this cannot happen in future.”

He added: “People can have understandably been shocked and appalled at how vulnerable individuals’s properties have been invaded and prepayment meters put in in opposition to their needs – and suppliers are solely at first of correcting this abhorrent behaviour.

“I am angered by the fact some have so freely moved vulnerable customers onto prepayment meters, without a proper plan to take remedial action where there has been a breach of the rules. So, I have only received half the picture as it still doesn’t include enough action to offer redress to those who have been so appallingly treated.”

7 February: Grant Shapps Pledges To Bring Down Bills

Prime Minister Rishi Sunak has break up the Department for Business, Energy and Industrial Strategy (BEIS) into three new authorities departments, writes Candiece Cyrus.

He has created the Department for Energy Security and Net Zero, alongside the Department for Science, Innovation and Technology, and the Department for Business and Trade.

He can be ‘refocusing’ the Department for Culture, Media, and Sport.

Grant Shapps MP, has moved from being business, vitality and industrial technique secretary, to the function of secretary of state for vitality safety and internet zero.

Following his appointment, Mr Shapps tweeted: “My focus will be securing our long-term energy supply, bringing down bills and thereby helping to halve inflation.”

On Sunday, Mr Shapps gave vitality corporations till the tip of at this time (Tuesday) to inform him what motion they’ll take if they’re discovered to have wrongfully put in prepayment meters within the properties of vulnerable clients.

The science, innovation and know-how secretary is Michelle Donelan MP. She was tradition secretary.

The present worldwide commerce secretary, Kemi Badenoch MP, has been appointed business and commerce secretary. She stays president of the Board of Trade, and minister for girls and equalities.

Lucy Frazer KC MP is new Secretary of State for Culture, Media, and Sport, having been a Minister of State for Housing and Planning.

6 February: Falling Wholesale Prices Fuel Optimistic Cap Forecast

Analysts Cornwall Insight has launched revised vitality value cap forecasts for the rest of the yr which, if correct, will see the cap undercut the federal government’s vitality value guarantee, writes Candiece Cyrus.

The value cap was launched in 2019, by business regulator Ofgem, to restrict the quantity vitality suppliers can cost households per unit of vitality and for related standing expenses.

Updated on a quarterly foundation, in response to wholesale vitality prices, it now stands at £4,279 for the interval January – March 2023.

However, due to the federal government’s guarantee, which subsidises costs to a median of £2,500 every year till the tip of March, the cap isn’t presently in use for home shoppers – Cornwall Insight’s determine demonstrates what a family with common consumption would pay if it have been.

The Guarantee stage will increase to £3,000 in April and can final for 12 months.

Cornwall Insight predicts that the cap will fall to £3,338 in April, earlier than falling additional to almost £2,362 in July. This would take the cap under the guarantee, rendering the latter redundant at that time – family payments would then be decided by the cap. However, they’d stay far in extra of the £1,271 common in place 12 months in the past.

In October, the analysts anticipate the cap to face at £2,389, nonetheless decrease than the Guarantee.

Forecasts for the cap are lowering as European international locations beforehand depending on Russia for pure gasoline supply various vitality provides

Warmer temperatures additionally helped scale back demand for vitality, thereby decreasing wholesale costs.

5 February: Government seeks finish to ‘abhorrent’ behaviour by suppliers over prepayment meters

Grant Shapps MP, vitality secretary, has given vitality suppliers a deadline of Tuesday to inform him what motion they’ll take if it emerges they’ve wrongfully put in prepayment meters within the properties of vulnerable clients.

Mr Shapps favours the cost of compensation in such circumstances.

As reported under, British Gas has admitted fault in circumstances the place vulnerable households, together with these with babies or medical circumstances, haven’t been handled pretty or with compassion.

News of the scandal, initially damaged by The Times, contains stories of debt collectors breaking into properties to put in prepayment meters. There are additionally stories of sensible meters being switched to prepayment mode remotely by some suppliers.

Mr Shapps is indignant that quite a few opinions by the regulator, Ofgem, into the providers supplied by vitality suppliers haven’t recognized this unacceptable behaviour or different vital shortcomings, and have even given some firms a clear invoice of well being.

He has ordered Ofgem to toughen up on vitality suppliers and examine buyer expertise of how suppliers are performing, together with establishing a brand new buyer reporting system for households to cross on their very own tales of how they’re being handled.

Mr Shapps mentioned: “I’m appalled that vulnerable clients fighting their vitality payments have had their properties invaded and prepayment meters put in when there’s a clear obligation on suppliers to supply them with assist.

“They have to refocus their efforts on their shoppers, who’re on the receiving finish of this abhorrent behaviour.

“I’m also concerned the regulator is too easily having the wool pulled over its eyes by taking at face value what energy companies are telling it. It needs to listen to customers to make sure this treatment of vulnerable consumers doesn’t happen again.”

Last Thursday, a number of suppliers introduced they’d droop pressured installations after being pushed by Ofgem to pause the observe. But this time final week, Mr Shapps launched a crackdown on the mistreatment of vitality customers by suppliers, already asking them to voluntarily decide to stopping this observe.

3 February: British Gas At Centre Of Controversy

Regulator Ofgem has acted to quell mounting controversy over the pressured set up of prepayment meters by vitality corporations, particularly in households recognized as ‘vulnerable’.

The transfer – which reportedly contains asking vitality suppliers to droop all pressured installations instantly – follows an investigation by The Times which discovered that British Gas has used locksmiths to achieve entry into properties in order that meters might be modified.

Ofgem mentioned: “These are extraordinarily severe allegations from The Times. We are launching an pressing investigation into British Gas and we gained’t hesitate to take agency enforcement motion.

“It is unacceptable for any provider to impose pressured installations on vulnerable clients struggling to pay their payments earlier than all different choices have been exhausted and with out finishing up thorough checks to make sure it’s secure and practicable to take action.

“We have launched a serious market-wide overview investigating the fast development in prepayment meter installations and potential breaches of licences driving it.

“We are clear that suppliers must work hard to look after their customers at this time, especially those who are vulnerable. The energy crisis is no excuse for unacceptable behaviour towards any customer, particularly those in vulnerable circumstances.”

There are round 4.5 million households with prepayment meters within the UK. They are favoured by many landlords and are additionally used the place clients usually are not ready or don’t need to pay in arrears for his or her vitality utilization by way of a month-to-month or quarterly invoice.

However, prepayment meters are dearer than credit score meters due to the upper administration prices.

Where a buyer with a credit score meter falls into deep arrears, vitality suppliers have been in a position to apply to the courts for a warrant to put in a prepayment meter to be able to stop the arrears worsening.

But the alleged use of pressured entry into properties occupied by vulnerable households by brokers engaged on behalf of British Gas has sparked criticism that your entire system is flawed and open to abuse.

Graham Stuart MP, vitality minister, has requested British Gas for assurance that its “completely unacceptable” behaviour won’t be repeated.

He mentioned through social media: “I need to see accountability on the very prime of the corporate and an evidence of the non-public function he [British Gas owner Centrica CEO Chris O’Shea] will take to repair these very severe cultural points and regain the general public’s belief.

“Most crucially of all I need to see these impacted by this recognized and redress supplied. While wrongdoing can’t be undone, substantial compensation can and needs to be given.

“British Gas has assured me that this process has begun and I will be monitoring matters extremely closely to make sure justice prevails.”

Mr O’Shea advised the BBC that British Gas has suspended the observe of forcing the set up of prepayment meters.

Ofgem has already introduced a overview of pressured prepayment meter set up and the distant switching of sensible meters from credit score to prepayment operation.

The regulator has additionally printed a overview of customer support and complaints efficiency from info submitted by 17 vitality suppliers. It discovered:

weak insurance policies and pathways for customer support journey, together with incomplete communications to clients in relation to complaints
inconsistent scripts for workers dealing with complicated calls
clients left ready for hours on the telephone on a number of events
telephone calls not picked up and gradual responses on written buyer contacts
as much as 50% of shoppers giving up and hanging up calls as not answered
excessive charges of buyer complaints upheld by the Energy Ombudsman
incomplete administration info getting used to watch efficiency
weaknesses in customer support brokers’ coaching and/or high quality management mechanisms.

Additionally, Ofgem discovered the next about particular firms:

extreme weaknesses in customer support at E.ON, leading to particular enforcement motion being issued
average weaknesses at 11 suppliers (British Gas, E Gas & Electricity, EDF, Good Energy, Outfox the Market, OVO, ScottishPower, SO Energy, Utilita, Utility Warehouse and Tru Energy)
minor weaknesses at 5 suppliers (Bulb, Ecotricity, Green Energy, Shell and Octopus).

Ofgem was unable to establish any suppliers with no weaknesses. It has began compliance engagement on areas needing enchancment.

24 January: Households Earn Credit By Pausing Consumption

Households with sensible meters will once more have the chance to earn credit score in opposition to their vitality payments tonight by participating within the Demand Flexibility Service run by National Grid and taking part vitality suppliers, writes Kevin Pratt.

The service, which is designed to scale back vitality consumption at peak occasions and underpin safety of provide, will final from 4:30pm to 6pm. Last night time (Monday) noticed the scheme function for the primary time after a collection of trials final yr – it ran from 5pm to 6pm, with an estimated a million households participating.

The monetary reward – normally paid as a reduction off the following invoice – is decided by how a lot vitality isn’t used in comparison with regular throughout the interval in query. A family lowering consumption by one kilowatt hour might be in line for financial savings of £3 – £6, in line with National Grid, though it’s as much as individual suppliers to find out the precise quantities.

To participate, you want a sensible meter, and your vitality provider should be signed as much as the scheme – it is going to contact you the day earlier than the Service operates if that is so.

If your provider isn’t taking part, you might be able to use an unbiased firm that can draw the related particulars out of your meter through an app. Details of the members can be found here. Both home and business shoppers are eligible.

The scheme isn’t primarily meant to scale back general demand throughout England, Scotland and Wales, the place it operates. Rather, the intention is to clean the spike in demand at peak occasions and ease strain on the grid, thus avoiding energy outages.

National Grid says it’s operating the scheme as a precaution and that folks shouldn’t be frightened about energy cuts. Industry observers say the difficulty has arisen for quite a few causes, together with the UK’s lack of storage capability for pure gasoline, which is used to generate electrical energy, and calm climate circumstances, which have diminished output from windfarms.

The Grid can be contemplating bringing mothballed coal-fired energy stations again into operation as additional back-up, particularly if the chilly snap continues. At current, the power to set off the demand administration service is scheduled to run till the tip of March.

23 January: National Grid ‘Power Hour’ Slated For Tonight

Grant Shapps MP, business and vitality secretary has written to vitality suppliers telling them to cease forcibly transferring shoppers onto prepayment meters with out offering sufficient assist to these in issue.

Mr Shapps is asking for voluntary dedication to stopping this observe. He can be demanding that suppliers share the variety of court-issued warrants they’ve utilized for in recent months, which allow them to change a family’s meter.

The authorities says suppliers needs to be making better efforts to assist shoppers in monetary difficulties earlier than forcing a change to a prepayment association. Statistics present that many households who’re forcibly switched subsequently see their vitality reduce off as a result of they don’t have the money to prime up their new meter.

National Grid’s Demand Flexibility Service can be used for the primary time this night between 5pm and 6pm due to an anticipated spike in demand linked to the chilly climate. It mentioned: “This does not mean electricity supplies are at risk and people should not be worried. These are precautionary measures to maintain the buffer of spare capacity we need.”

The service permits clients of participating energy suppliers to be financially rewarded in the event that they scale back their electrical energy utilization throughout peak hours. Customers – who have to have a sensible meter – are contacted by their provider prematurely to allow them to take part. The quantity earned by members might attain £10 relying on how a lot they scale back their regular energy utilization by throughout the hour.

National Grid has additionally requested mills to fireside up coal-fired energy stations to spice up safety of provide.

Mr Shapps believes corporations might supply extra credit score, debt forgiveness or debt recommendation. He has requested suppliers to debate doable motion they’ll take to assist clients and keep away from pressured becoming.

He says courts are being “overwhelmed” with purposes for warrants, with stories that giant batches are being permitted in a matter of minutes. The authorities goals to make sure that the method by which suppliers convey these circumstances to court docket is truthful, clear and helps vulnerable clients.

Mr Shapps mentioned: “Suppliers are clearly leaping the gun and transferring at-risk clients onto prepayment meters earlier than providing them the assist they’re entitled to – I merely can not consider that each doable various has been exhausted in all these circumstances.

“I’m deeply involved to see stories of shoppers being switched to prepayment meters in opposition to their will, with some disconnected from provide – and fairly actually left at nighttime.

“Rather than immediately reaching for a new way to extract money out of customers, I want suppliers to stop this practice and lend a more sympathetic ear, offering the kind of forbearance and support that a vulnerable customer struggling to pay should be able to expect.”

The authorities has resisted requires a moratorium on pressured prepayment switching, saying this might result in a rise in bailiff motion as suppliers attempt to get better debt from households with unpaid arrears.

Some vitality suppliers are already taking steps to assist shoppers akin to by pausing distant switching of sensible meters to prepayment mode or offering extra credit score to clients struggling to pay. The authorities desires all suppliers to extend this sort of assist to keep away from resorting to pressured becoming.

Suppliers are additionally being requested to work more durable to make sure households redeem vouchers issued below the federal government’s Energy Bills Support Scheme in order that they’ll have money knocked off their vitality payments.

The authorities says 71% of vouchers have been redeemed thus far and has issued an inventory of provider redemption charges displaying which corporations are assembly their duties and which of them have to do extra.

Topping the checklist for many vouchers redeemed is E Gas & Electricity with 85%, adopted by Bulb with 79%, with Good Energy, Utilita and Scottish Power on the backside of the checklist. The authorities has known as on these suppliers to make sure their prepayment clients are clear on how they’ll redeem their vouchers.

There can be a summit of presidency, suppliers, the regulator Ofgem, commerce physique Energy UK and charity Citizens Advice within the coming days. Under dialogue can be a plan to deal with what is known as “bad behaviour” by vitality suppliers. In addition to publishing provider voucher redemption charges, this contains:

a name for suppliers to voluntarily cease the observe of pressured prepayment switching as the reply to households struggling to pay payments and make better effort to assist probably the most vulnerable
request of the discharge of provider information on the variety of warrant purposes they’ve made to forcibly enter properties to put in meters
launch of a public info marketing campaign reminding eligible shoppers to redeem their Energy Bills Support Scheme vouchers
coordination with Ofgem to make sure the regulator takes a extra strong method to the safety of vulnerable clients and conducts a overview to ensure suppliers are complying with guidelines.

Ofgem mentioned it doesn’t have the ability to ban pressured prepayment meter set up nevertheless it has dedicated to reviewing:

self-disconnections (when clients on prepayment plans can not afford to top-up their meter and are left with out vitality)
distant switching of sensible meters to prepay mode
pressured meter installations
the method suppliers use when deciding whether or not to place households on prepayment meters.

It mentioned the place it finds that corporations haven’t taken due care it is going to take authorized motion. It is to overview the principles round when a court docket warrant might be issued and the steps that needs to be taken first.

The regulator can even perform what it phrases a ‘serious assessment’ of the idea of a social tariff. This could be extra reasonably priced for financially deprived clients, and has been put ahead by business figures as a approach to deal with vitality invoice affordability points.

Ofgem will contemplate how such a tariff could be administered, together with how individuals would qualify and the way any subsidy could be paid for, and by whom.

Jonathan Brearley, Ofgem’s chief govt, mentioned: “If it [a social tariff] can be made to work, this could tackle the root cause of this issue and the distress that many customers are in this winter”.

19 January: Cornwall Insight Says Cap Could Fall To £2,200 In July

Market analyst Cornwall Insight has lowered its forecasts for the Ofgem vitality value cap for the rest of this yr on the again of falling wholesale vitality costs, writes Candiece Cyrus.

The cap on what suppliers can cost home clients for models of vitality and standing expenses is ready by the regulator each three months as regards to prevailing wholesale vitality costs. For the interval January – March 2023 it stands at £4,279.

Cornwall Insight forecasts that it’ll first drop from its present stage to £3,208 in April, earlier than dropping additional to £2,201 in July after which seeing a small rise to £2,241 in October.

The quickly rising stage of the cap within the latter half of 2022 prompted the federal government to introduce the Energy Price Guarantee in October. At current, this undercuts the cap and implies that annual payments for a family with common consumption are round £2,500 till April 2023, when the Guarantee ceiling is scheduled to rise to £3,000 for an additional 12 months.

However, if and when the cap dips under the extent of the Guarantee, the latter successfully turns into redundant, with suppliers required to stick to the cap as soon as extra.

Ofgem commented: “While the Energy Price Guarantee continues to use, this can be placed on prime of client payments, and clients are charged both the EPG or value cap charge, relying on whichever charge is decrease.

“In a circumstance where the price cap level falls below the EPG level, suppliers are still required not to overcharge customers more than the level of the price cap.”

Despite the revised predictions, the value cap will stay properly above its stage of £1,227 earlier than the vitality disaster took maintain final yr.

Dr Craig Lowrey, principal marketing consultant at Cornwall Insight mentioned: “We have no idea what’s going to occur over the approaching months and there’s a lengthy approach to go earlier than anybody might be sure what the true unit charges can be past the summer season.

“So, whereas declining wholesale markets and cap forecasts could also be a purpose to really feel cheerful, nothing is assured on this new European vitality market. Reading an excessive amount of, too early, into costs falling, might be simply as dangerous as studying an excessive amount of, too early into costs rising.

“Policy really needs to be ‘on notice’ of sudden changes, and both elastic and responsive in such an environment.”

12 January: Charity Calls For Moratorium On Further Forced Prepay Switches

Energy suppliers are persevering with to pressure clients, together with the disabled and people with long run well being circumstances, onto prepayment meters, in line with Citizens Advice.

Under market guidelines, suppliers usually are not allowed to pressure probably the most vulnerable, such because the disabled, onto prepayment plans. The regulator, Ofgem, solely permits such motion as a final resort to get better debt, if the client isn’t in a vulnerable scenario. The regulator reminded suppliers to adjust to the rule final October.

However, Citizens Advice says suppliers are transferring disabled clients onto prepayment plans, and {that a} appreciable variety of disabled vitality clients can not afford to prime up.

There are round 4.5 million prepayment meter households within the UK, with round 1.4 million

together with a disabled person, or somebody with a long run health-condition.

Citizens Advice says that, within the month following Ofgem’s warning in October, round a 3rd of those – 470,000 households – have been left with no vitality as they have been unable to prime up.

More broadly, Citizens Advice estimates that 600,000 households have been pressured onto prepayment meters as a result of they might not sustain with their vitality invoice funds in 2022. This contains suppliers remotely switching households utilizing sensible meters onto prepayment plans, with out the necessity for handbook set up of a brand new meter.

It estimates one other 160,000 households might be pressured onto prepayment meters by the tip of this winter if no motion is taken.

Overall, it discovered that 3.2 million households throughout the UK ran out of credit score on their prepayment meter final yr as they might not afford to prime it up. The majority of those households (two million) couldn’t afford to prime up greater than as soon as, whereas almost a fifth (19%) spent no less than 24 hours with out gasoline or electrical energy.

In 2022, it says it noticed extra individuals who couldn’t afford to prime up their meter than within the final 10 years mixed.

The charity is looking for a ban on pressured prepayment meter installations till new protections are in place that stop households from going with out gasoline and electrical energy if they can’t afford credit score.

Last week, the Resolution Foundation mentioned that folks with disabilities have been disproportionately affected by rises in vitality prices.

The assume tank’s Costly Differences report, which features a YouGov survey of almost 8,000 working-age adults, together with 2,000 who report long-term sickness or incapacity, discovered that 48% of disabled respondents have needed to reduce on vitality use this winter.

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10 January: Industry Body Warns Thousands Of Small Businesses Could Go Bust Following Change To Support Package

Thousands of firms are liable to collapse following a authorities resolution to chop monetary assist for his or her vitality prices, business leaders have warned, writes Candiece Cyrus.

The authorities mentioned it might be changing its present assist for businesses’ vitality payments with a brand new Energy Bills Discount Scheme from 1 April 2022.

The Federation of Small Businesses (FSB) mentioned: “While the new year should be a time of optimism and excitement, 2023 looks like the beginning of the end for tens of thousands of small businesses, which have been relying on government energy support to survive this winter.”

Instead of a cap on prices supplied below the present Energy Bills Relief Scheme (EBRS), the brand new scheme – set to run till 31 March 2024 – presents a reduction on the wholesale unit cost of vitality.

As the low cost solely comes into play when wholesale vitality prices exceed a given ‘floor price’, the assist has been dismissed as “insignificant” by business representatives.

For most businesses, the utmost low cost on electrical energy can be set at £19.61 per Megawatt hour (MWh) with a ‘price threshold’ of £302 per MWh.

For gasoline, the utmost low cost can be £6.97 per MWh with a value threshold of £107 per MWh.

Businesses experiencing vitality prices under these ranges won’t obtain assist.

Martin McTague, nationwide chair of the FSB mentioned: “For those struggling, the discount through the new version of the scheme is not material. Many small firms will not be able to survive on the pennies provided through the new version of the scheme.”

He added: “This is so out of touch. Two pence off a kWh of electricity and half a pence off gas is totally insignificant for small businesses, despite costing billions to the taxpayer.”

Businesses that rely closely on vitality, nonetheless, akin to glass, metal and ceramic producers, will obtain a much bigger low cost.

For electrical energy, this can be £89 per MWh with a value threshold of £185 per MWh – and, for gasoline, £40 per MWh with a value threshold of £99 per MWh.

The current EBRS, which caps per-unit cost of vitality, was launched in October 2022 as a short lived six-month measure to guard businesses from hovering vitality prices.

The authorities mentioned that it had made clear that “such levels of support were time-limited” and have been “intended as a bridge to allow businesses to adapt”. The present scheme will finish as deliberate on 31 March 2022.

Mr McTague mentioned: “The current EBRS scheme provides certainty for a small business owner over their rates, and has made a material difference to the survival of many small businesses. The replacement scheme will do neither.”

The announcement of the brand new scheme follows wholesale vitality costs falling to ranges much like these earlier than Russia’s invasion of Ukraine in February 2022 earlier than sanctions on its gasoline exports brought on vitality costs to soar (see update under).

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4 January: Gas Price At 12-Month Low But Consumers To Wait Months For Reductions

Wholesale gasoline costs are at ranges final seen earlier than Russia’s invasion of Ukraine in February 2022 pushed them to report highs final yr, in line with figures from information firm Refinitiv, writes Candiece Cyrus.

This has prompted questions from client teams as to why family and business vitality payments stay at excessive ranges and don’t mirror wholesale market developments. Industry figures say the trigger is the observe of hedging, which sees suppliers purchase inventory months prematurely.

The warfare in Ukraine and the ensuing international sanctions on Russia’s gasoline exports brought on vitality payments to soar, prompting the UK authorities to introduce an Energy Price Guarantee (EPG) for home clients in October 2022.

Up to that time, typical family payments have been restricted by the value cap set by business regulator Ofgem. But when it turned clear that the cap would cross £3,500 a yr for common payments, the federal government stepped in, introducing the EPG to restrict typical annual payments to £2,500.

The new Ofgem cap, which took impact this month, stands at £4,279 a yr for the common family. However, the EPG will stay at £2,500 till April, when will probably be raised to £3,000 till March 2024.

The discount in wholesale costs has come about partly as a result of the EU is buying bigger provides of liquefied pure gasoline (LNG) as an alternative choice to Russian gasoline imports from international locations such because the US and Qatar.

This, teamed with the truth that the UK and different European international locations have made efforts to spice up ranges of saved gasoline prematurely of the winter months, has brought on wholesale gasoline costs to tumble.

Thanks to hotter temperatures in recent weeks, diminished demand for gasoline has brought on costs to fall additional.

Yesterday, Refinitiv, recorded the value of gasoline purchased for supply to the UK subsequent month as €72.40 per megawatt hour. When Russia invaded Ukraine on 24 February 2022, the value of gasoline leapt to €134.31 per megawatt hour, and reached a peak of €339.19 per megawatt hour on 26 August final yr.

Yuriy Onyshkiv, senior analyst at Refinitiv Gas Research, mentioned: “A starkly heat December has even helped some nations to renew storage injections for almost two weeks on the finish of December – an unprecedented growth for winter when withdrawals usually prevail.

“All of this provided supply confidence to the market and weighed on prices.”

Ofgem requires suppliers to buy wholesale vitality weeks and months prematurely to guarantee provide, so at this time’s retail costs mirror the excessive prices of final autumn. Today’s decrease wholesale prices won’t feed by way of to family payments till later this yr.

Today, analyst Cornwall Insight introduced its latest Ofgem vitality value cap forecast, considering falling costs.

It predicts the cap, which is adjusted on a quarterly foundation, will fall to £3,545 a yr from £4,279 a yr in April, however will drop to £2,800 a yr in July. As a end result, the EPG, which is because of improve to £3,000 a yr in April, would successfully change into redundant from July onwards.

In October, Cornwall Insight predicts the cap will rise marginally to £2,835 a yr.

Financial providers firm, Investec, predicts comparable figures: £3,458 a yr in April, £2,640 a yr in July, and £2,704 a yr in October.

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21 December: Bulb Members To Transfer Automatically To Octopus

Octopus has accomplished its takeover of Bulb, the failed vitality provider pressured into particular administration in November 2021, writes Kevin Pratt.

The particular administration was arrange by the federal government and the vitality regulator, Ofgem, to guard clients within the occasion of a giant provider akin to Bulb going bust. With 1.7 million clients, Bulb was an excessive amount of of a legal responsibility for different vitality firms to soak up throughout the peak of the vitality disaster, which noticed round 30 suppliers shut their doorways within the house of 18 months.

Suppliers went out of business as a result of wholesale vitality costs have been greater than they have been in a position to cost their clients due to the Ofgem value cap, which was in impact on the time.

Bulb’s particular administration association is alleged to have cost as much as £4 billion, with the ultimate invoice being met by taxpayers and by a levy on vitality payments.

On its buyer weblog, Bulb says: “The sale of Bulb’s vitality provide business to Octopus Energy is now full. Our members don’t have to do something.

“When it’s time to maneuver to Octopus, you’ll be given new account particulars. Octopus will ship you all the small print about how one can arrange a web based account and obtain their app. Until then, your Bulb account quantity will stay the identical and you may hold utilizing your Bulb app and account.

“If you’re a former member with a debit or credit balance in your account, your energy supplier will not be affected and this debit or credit balance will be transferred.”

13 December: Vulnerable Customers To Receive £20 Credit After Supplier Fails To Provide Support

Over 25,000 prepayment clients of Utilita are to obtain £20 meter credit as compensation for not receiving assist once they first requested it, writes Candiece Cyrus.

Energy corporations are required by the regulator, Ofgem, to supply assist to vulnerable clients, such because the disabled and elderly, in the event that they haven’t any different technique of topping up their meter.

Ofgem says Utilita didn’t take individual circumstances into consideration when deciding whether or not or to not present Additional Support Credits for purchasers struggling to top-up their prepayment meters.

The provider can even pay £321,740 into the Energy Redress Fund, which helps vitality clients in vulnerable conditions.

Ofgem imposed the compensation funds after reviewing recorded calls between Utilita staff and clients, together with the agency’s coaching supplies, procedures and insurance policies.

Cathryn Scott, Ofgem’s director for enforcement & rising points, mentioned: “Prepayment meters are presently relied on by round 4 million UK households, and the present cost of residing difficulty is inserting strain on many households, which in flip is inflicting extra individuals to require extra assist credit to top-up for his or her prepayment meters.

“While Utilita has moved swiftly to correct these issues and agreed to compensate those affected, this action should serve as a reminder to other suppliers to go further to ensure vulnerable groups are getting the support they need, particularly during the colder winter months.”

Anyone receiving a assist credit score from their provider is required to pay it again once they subsequent top-up their meter. If this isn’t doable, they need to be supplied a manageable reimbursement plan.

30 November: £22.2 Grid Upgrade Billion Plan Will Meet Demand From Electric Vehicles

Industry regulator Ofgem has confirmed a £22.2 billion five-year funding package deal designed to make the UK electrical energy grid cheaper, cleaner and extra dependable, writes Candiece Cyrus.

The funding in infrastructure over the interval from 1 April 2023 to 31 March 2028 can be delivered with out a rise in community expenses on buyer payments. Households will proceed to pay £100 a yr.

Instead of passing the prices on to households, Ofgem expects the six firms that run the UK’s electrical energy distribution community – Electricity North West Limited, Northern Power Grid, National Grid Electricity Distribution, UK Power Networks, SP Energy Networks, and Scottish and Southern Electricity Networks – to decrease returns to their traders and work on making their operations extra environment friendly.

The regulator additionally expects the businesses to make use of the funding to drive the UK’s transfer away from its excessive dependence on imported fossil fuels, together with pure gasoline.

To obtain this, the regulator mentioned modifications in the way in which vitality is used and saved can be required to permit for greener sources akin to wind, photo voltaic and wave energy.

Ofgem says the introduction of an environment friendly, greener grid will anticipate elevated demand for electrical energy from the upper variety of warmth pumps being utilized in properties and a rise in electrical autos (EV).

The sale of latest petrol and diesel vehicles can be banned within the UK from 2030.by the tip of the last decade.

Ofgem mentioned ‘smart’ and digital applied sciences will give shoppers extra management over their vitality utilization, enabling them to make the most of up to date off-peak charges or keep away from peak costs. Electricity costs will fluctuate extra often to mirror fluctuations in era from weather-dependent renewables.

Households can even be capable of promote electrical energy again to the grid in periods when vitality era is low, from sources akin to EV batteries.

Akshay Kaul, Ofgem interim director, infrastructure and safety of provide group, mentioned: “The economics of energy have shifted, with home-grown cleaner renewables like wind and solar energy proving cheaper than costly imported gas. Together with more nuclear and potentially hydrogen fuelled power, these renewables will contribute to a lower carbon energy mix, better protected from geopolitical events and energy price shocks.”

Gillian Cooper, head of vitality coverage for Citizens Advice, mentioned: “Networks have been allowed to make extreme income for a lot too lengthy. In the center of a cost-of-living disaster, Ofgem is true to problem them to function as effectively as doable, which is able to assist decrease individuals’s payments.

“Today’s announcement reveals some progress in getting higher worth for money for shoppers. It must also imply networks can reinforce key infrastructure so there’s the capability to attach electrical autos, warmth pumps and wind-farms, serving to to ship the net-zero transition.

“However, network profits will still be too high and targets too easy. We believe Ofgem could have gone further and cut at least £1.5 billion more off people’s bills.”

29 November: Tips Designed To Reduce Consumption And Cut Bills

The authorities is giving an £18 million increase to its Help for Households campaign to encourage individuals to avoid wasting vitality and reduce their payments, writes Candiece Cyrus.

The £18 million marketing campaign contains vitality saving ideas , akin to draught-proofing home windows and doorways, lowering a boiler’s water move temperature, and turning down radiators in rooms that aren’t getting used.

The authorities says the marketing campaign will assist the UK attain its goal to scale back vitality demand by 15% by 2030. It can even goal the vulnerable, akin to pensioners and the disabled, with recommendation on how they’ll safely make cost-effective modifications to their vitality consumption this winter and past.

Grant Shapps, business secretary, mentioned: “Our new public information campaign will give people the tools they need to reduce their energy use while keeping warm this winter.”

Gillian Cooper, head of vitality coverage for Citizens Advice, mentioned: “People want clear, constant recommendation on how one can safely scale back their vitality use. We stay up for seeing how the federal government will guarantee everybody has the knowledge they want to do that.

“But that is solely a part of the answer to the monetary pressures individuals are going through. Some we’re serving to are making determined decisions to maintain payments down – like turning the heating off regardless of having a well being situation which suggests they should hold heat.

“An energy saving campaign has to go hand-in-hand with continued financial support for people at the sharp end of this crisis.”

28 November: Government Wants Bills To Reflect Usage

Grant Shapps MP, business secretary, has written to vitality corporations warning them to not over-estimate expenses for purchasers on direct debits, writes Candiece Cyrus.

In the letter despatched on the weekend, Mr Shapps mentioned: “It is essential that customers are in a position to handle their payments successfully, and direct debit might be an environment friendly means for households to clean their vitality prices over the yr.

“It is in all our pursuits that when shoppers take wise steps to scale back their very own payments, akin to lowering their boiler move temperature or making their properties extra vitality environment friendly, that they can see an influence of their payments.

“I’m very eager that each one suppliers discover a approach to make their programs extra responsive to those optimistic modifications in client behaviour and have requested Ofgem to report back to me on how this may be achieved.

“With other costs increasing for households, it is critical that we do what we can to help. I am interested to understand how you intend to ensure that your Direct Debit system does not over-estimate charging.”

While direct debit is the least costly approach to pay for vitality payments, suppliers can over-estimate expenses as a result of they’re normally based mostly on an estimate of how a lot a family will use over a yr.

Energy clients ought to present their suppliers with common vitality readings to make sure their payments mirror the gasoline and electrical energy they’re utilizing.

Industry regulator Ofgem reviewed how suppliers adjusted clients’ direct debits earlier this yr and located 17 massive corporations had ‘moderate to severe weaknesses’ of their processes. See 13 July update under.

Ofgem mentioned it was partaking with the corporations to drive enhancements to procedures and reassess buyer direct debits the place essential.

Energy clients can problem their provider if it will increase their direct debit cost quantity. They ought to ask for the meter readings it used and examine that they’re the identical as these on their payments. They can declare again money owed if they’ve been overcharged, through a refund, a diminished direct debit or as credit score on their account.

28 November: ECO+ Initiative Targets Energy-Inefficient Housing Stock And Vulnerable Households

The authorities is launching a £1 billion scheme to fund home insulation for the least energy-efficient households, which ought to save these eligible as much as £310 a yr in vitality prices, writes Candiece Cyrus.

The ECO+ scheme, which is able to run from spring 2023 to March 2026, will goal households with an Energy Performance Certificate (EPC) score of D or under, and people within the decrease council tax bands, reportedly as much as and together with Band D.

This contains households which don’t obtain authorities assist below current schemes, akin to ECO/ECO4, which solely offers grants to those that are in social housing, on a low-income, are gas poor and who want assist to hold out energy-efficient upgrades to their properties.

Twenty % of funding can even go in the direction of probably the most vulnerable vitality clients, akin to these on means-tested advantages and people in gas poverty.

EPCs present how vitality environment friendly a building is, utilizing a score from A (very environment friendly) to G (inefficient). Energy clients are thought-about gas poor if their home has an EPC score of D or under and their residual earnings falls under the official poverty line as soon as they’ve paid to warmth their home.

Jeremy Hunt, Chancellor of the Exchequer, mentioned: “In the long run, we have to make Britain extra vitality unbiased by producing extra clear, reasonably priced, home-grown energy, however we additionally want extra environment friendly properties and buildings.

“Our new ECO+ scheme will help hundreds of thousands of people across the UK to better insulate their homes to reduce consumption, with the added benefit of saving families hundreds of pounds each year.”

25 November: Ofgem Reforms Aim To Prevent Expensive Corporate Failures

Industry regulator Ofgem has launched a package deal of reforms to scale back the danger of vitality suppliers folding in unstable market circumstances, writes Candiece Cyrus.

Ofgem desires to guard vitality clients by making certain corporations are financially steady. It is setting a minimal quantity of money suppliers should maintain within the financial institution to make them higher in a position to face up to market shocks.

Thirty vitality suppliers have gone bust for the reason that begin of the present vitality market disaster in August 2021, which was triggered by an increase in wholesale vitality costs. This resulted in Ofgem having to maneuver thousands and thousands of shoppers to new corporations at a cost to invoice payers, estimated by the National Audit Office (NAO), of £2.7 billion.

The largest failed provider, Bulb, was placed in particular administration in November 2021 as a result of no different agency was keen or in a position to tackle its 1.7 million buyer base.

After protracted negotiations, it was agreed that Bulb clients will now transfer to vitality provider Octopus (see 29 October update). The cost of particular administration has been put at £3 billion, with invoice payers once more selecting up the tab.

To forestall additional company failures, Ofgem has bolstered restrictions on how suppliers can use buyer credit score balances after discovering that some corporations had used money in buyer accounts to fund their business operations.

Jonathan Brearley, Ofgem’s chief govt, conceded this summer season that buyer balances “are used by some suppliers like an interest-free company credit card.”

The regulator can even make sure that money meant to be spent by suppliers on renewable vitality can be ringfenced for that objective.

Mr Brearley mentioned: “The vitality disaster has had a profound influence on the sector, its business fashions, our method to its regulation, and the way in which we take into consideration threat.

“These proposals will provide protections, checks and balances for consumers, suppliers and the entire sector to create a more stable market. We want suppliers to be able to be innovative and dynamic, while also making sure they are financially stable, and that customers’ money is protected.”

Gillian Cooper, head of vitality coverage for Citizens Advice, mentioned: “Ofgem should guarantee individuals by no means once more expertise the chaos and cost of a number of suppliers going bust.

“It’s important that these proposals result in concrete change that’s felt by clients. The solely means that can occur is that if these new guidelines are enforced.

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24 November: Govt Price Guarantee Over-Rides Cap Increase

Consumers shouldn’t interpret at this time’s announcement a couple of steep improve within the Ofgem vitality value cap as a sign their payments will rise.

The vitality regulator has confirmed that its cap can be set at £4,279 for 3 months from 1 January 2023 for a median family with typical consumption paying by direct debit. The present determine is £3,549.

However, payments will proceed to be restricted by the federal government’s vitality value guarantee, which was introduced in on 1 October.

This limits the common family annual invoice to £2,500 for the interval as much as 31 March 2023. Ofgem says: “The energy price cap level indicates how much consumers on their supplier’s basic tariff would pay if the price guarantee were not in place.”

It added: “There is no immediate action for consumers to take as a result of today’s announcement.”

The cap is calculated as regards to wholesale vitality costs and displays how a lot firms are paying to safe provides. The measurement of the cap determines how a lot the federal government should contribute to convey payments all the way down to a median of £2,500.

From 1 April, the value guarantee can be set at £3,000 a yr for common consumption households, whatever the value cap efficient at that time. Ofgem will announce this determine on 27 February.

Under present plans, the federal government will withdraw its value guarantee on 31 March 2024.

The value guarantee doesn’t put a ceiling on payments. It limits the quantity that may be charged per unit of gasoline and electrical energy and units the standing cost for every property. Actual payments will at all times be decided by the quantity of vitality used.

22 November: Regulator Wants Action Ahead Of ‘Challenging’ Winter

Industry regulator Ofgem desires UK vitality corporations to do extra to assist ‘vulnerable’ clients akin to these of state pension age and those that are disabled, pregnant or residing with a psychological well being situation, writes Candiece Cyrus.

Its latest overview discovered 5 vitality suppliers – Good Energy, Outfox, SO Energy, TruEnergy and Utilita – to be the worst performing with regard to how they establish vulnerable clients and whether or not they’re including them to the Priority Services Register, which offers extra assist to clients who want it.

Another 5 corporations – E (Gas & Electricity), Ecotricity, Green Energy UK, Octopus and Shell – have been considered as having ‘moderate weaknesses’ on this regard, whereas seven – British Gas, Bulb, EDF, E.ON, Ovo, Scottish Power and Utility Warehouse – have been seen as having ‘minor weaknesses’.

Energy clients needs to be handled as vulnerable by their suppliers in the event that they:

are of state pension age
are disabled
have a listening to or sight situation
have a long-term medical situation
are recovering from an damage
have a psychological well being situation
are pregnant
have young youngsters
have further communication wants (akin to not talking/studying English properly)
use medical tools that requires an influence provide
have poor/no sense of scent
would wrestle to reply the door
would wrestle to get assist in an emergency.

Customers on the Priority Services Register might qualify for assist akin to free gasoline security checks. If they’ve issue seeing, their provider can ship their account info and payments in massive print or braille. If they’re on a prepayment meter, their provider can guarantee it’s safely accessible.

Customers can examine precisely what assist is available by contacting their provider.

Ofgem additionally recognized good observe from some corporations, akin to providing their clients money grants in the direction of vitality payments. Many corporations have additionally signed as much as commerce physique Energy UK’s Vulnerability Commitment, which goals to enhance assist provision on this space.

Neil Lawrence at Ofgem mentioned: “We welcome the cooperation from suppliers and motion taken thus far, and, though we’re seeing some excellent observe in elements of the business, we will see there’s nonetheless rather more to be completed.

“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 vitality coverage at Citizens Advice, mentioned: “Given the big pressures going through individuals this winter, vitality suppliers needs to be doing every part of their energy to establish and assist struggling clients.

“Citizens Advice sees day in, time out the heartbreaking penalties when this assist falls quick. People slicing again on meals and necessities to cowl vitality money owed and residing in chilly and darkish properties once they’ve merely run out of money to prime up their meter.

“Ofgem is right to hold energy companies to task, it must now ensure this review leads to concrete action.”

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4 November: Smart Meters Needed To Join Energy Saving Scheme To Fight Blackouts

Households and businesses with sensible meters might be rewarded with reductions on their payments this winter in the event that they scale back their electrical energy consumption throughout peak hours, below a scheme launched in England, Scotland and Wales at this time, writes Candiece Cyrus.

The Demand Flexibility Service, devised by National Grid Electricity System Operator (ESO) and permitted by regulator Ofgem, will supply reductions which might complete as much as £100 for households, based mostly on them receiving £3 per Kilowatt-hour and extra for businesses.

Energy clients must be with a taking part provider. Octopus, which final weekend took over the client base of failed agency Bulb (see story under) has already confirmed that will probably be operating the scheme, having trialled it earlier this yr.

Other corporations have been in session with the ESO to launch the service for his or her clients.

The corporations might want to monitor electrical energy utilization in actual time, which suggests solely vitality clients on sensible meters that may present half-hourly readings will be capable of take part.

The scheme will begin with 12 ‘test’ days between 3 November and 31 March 2022. Participants can be given 24 hours’ discover to scale back their electrical energy consumption for an hour between 4pm and 7pm on weekdays.

Customers who change their utilization, for instance through the use of their washer or dishwasher at various occasions, will obtain a reduction.

The ESO pays vitality suppliers providing the service a minimal of £3 for each kilowatt-hour (kWh) throughout the take a look at intervals. It is as much as every agency to resolve how a lot of the sum they’ll use as an incentive for his or her clients and the way they’ll cross the low cost on to them.

Fintan Slye, govt director of the ESO, mentioned: “We are delighted Ofgem has approved the use of our Demand Flexibility Service this winter. It will help mitigate the potential risks the ESO has outlined in its Winter Outlook and will allow consumers to see a financial return for reducing their electricity use at peak times.”

The launch of the scheme follows a warning from the ESO final month that it might have to implement energy cuts if demand for vitality outstrips provide this winter, as the worldwide vitality disaster continues.

The ESO is trying into how one can prolong the scheme to vitality clients who usually are not on sensible meters.

31 October: Millions Of October’s Vouchers Yet To Be Redeemed

Concern is rising concerning the excessive variety of conventional prepayment meter clients who’ve but to redeem their first voucher to assist with vitality prices below the federal government’s Energy Bill Support Scheme, writes Candiece Cyrus.

The Scheme offers a £400 low cost on all family electrical energy payments between October 2022 and March 2023. For these with old-style prepay meters, this entails redeeming vouchers when topping-up playing cards or keys.

Customers ought to have obtained their October vouchers by now. Customers who haven’t but obtained theirs ought to contact their vitality supplier.

In a report for the BBC, cost service PayPoint says it anticipated to redeem £52.8 million vouchers this month. However, it has thus far solely redeemed £27 million.

The authorities is urging vitality clients to redeem their vouchers as they solely stay legitimate for 90 days.

Recipients ought to obtain a second £66 voucher In November and a £67 voucher every month between December to March.

Depending on their vitality agency, conventional prepayment meter clients ought to obtain the assist as a voucher both by put up, textual content or e-mail, or as automated credit score once they prime up. The vouchers might be redeemed at Post Offices or within the 28,000 shops with PayPoint providers throughout the UK.

Four million households use a ‘pay-as-you-go’ prepayment meter, and half of those households use older meters with out sensible know-how, in line with business regulator Ofgem.

Customers on a sensible meter ought to have their meters credited mechanically with their entitlement.

Households paying for his or her vitality in arrears by fastened month-to-month direct debit ought to anticipate their instalments to be deducted from their payments, or the money to be refunded after their invoice has been paid.

Those who obtain month-to-month or quarterly payments based mostly on their vitality consumption, will see every month-to-month installment as a deduction from their invoice, or utilized as credit score to their steadiness.

Although vitality corporations can transfer clients onto prepayment meters when they’re struggling to pay their payments, they are usually dearer than paying for vitality in arrears by direct debit.

Citizens Advice introduced final month that the variety of individuals looking for assist from the charity as a result of that they had been moved to a prepayment meter soared by 138% during the last two years.

It predicted that prepayment clients might spend £258 greater than direct debit clients on vitality this winter.

29 October: Failed Supplier Exits Special Administration Limbo

Customers of Bulb, the vitality firm placed into particular administration by the vitality market regulator, Ofgem, in November 2021, will transfer to Octopus as a part of a government-approved deal hammered out up to now 24 hours.

The 1.5 million clients concerned don’t have to take any motion, and the method shouldn’t contain any disruption to their provide or account administration. All phrases and circumstances of tariffs and credit score balances stay the identical and clients ought to proceed to make funds in the identical means they do now.

Bulb clients are being suggested to not contemplate switching to a different agency no less than till the switch of the business is accomplished in November. The overwhelming majority of vitality shoppers throughout the nation are presently on normal variable charge offers from their provider, with no cheaper offers available.

Octopus, which has an excellent popularity for customer support, will proceed to make use of Bulb’s know-how and model for a transitionary interval so that there’s a clean switch for Bulb’s clients.

The deal is the fruits of a aggressive sale course of run by the particular directors, Teneo. They have been appointed to run the corporate as a result of, this time final yr, no different vitality firm was keen or in a position to tackle such a big buyer base, given the cost of supplying them with vitality below the then-operating Ofgem value cap.

Newly-appointed business secretary Grant Shapps mentioned: “This is a fresh start and means Bulb’s 1.5 million customers can rest easy, knowing they have a new energy home in Octopus.”

Greg Jackson, CEO and founding father of Octopus Energy Group, mentioned: “We [Octopus and Bulb] started off as rivals but shared the same mission – driving a greener, cheaper energy system with people at the heart. We know how important this is to Bulb’s loyal customers and dedicated staff, and are determined that Octopus can provide them with a stable home for the future.”

Bulb clients can learn extra about this deal and what it means for them on the Bulb blog and common updates on the following steps on Octopus Energy’s information page.

28 October: UK Dips To Nine Days’ Reserves Ahead Of Winter

The proprietor of British Gas, Centrica, introduced at this time that it has reopened its Rough gasoline storage facility in time for winter when vitality demand will rise within the UK, writes Candiece Cyrus.

Surplus pure gasoline can be injected into the power when costs are low, after which used at occasions of excessive demand, akin to throughout the upcoming colder months, which the corporate says will assist stabilise or scale back vitality payments. Centrica has resumed Rough operations after 5 years, following engineering upgrades over the summer season.

The facility, which is a gasoline discipline situated within the North Sea 20 miles off the coast of Easington, Yorkshire, was closed in 2017 after issues have been discovered with quite a few the 30 wells used to inject and withdraw gasoline.

Although the work completed thus far on Rough will solely allow it to function at 20% of its earlier capability this winter, this is sufficient to make it the UK’s largest gasoline reserve, boosting the UK’s gasoline storage quantity by 50%.

It can retailer as much as 30 billion cubic toes of gasoline, which might then be distributed through the UK’s gasoline community to households and businesses.

Chris O’Shea, Centrica’s chief govt, mentioned “I’m delighted that we’ve managed to return Rough to storage operations for this winter following a considerable funding in engineering modifications.

“In the short term we think Rough can help our energy system by storing natural gas when there is a surplus and producing this gas when the country needs it during cold snaps and peak demand. Rough is not a silver bullet for energy security, but it is a key part of a range of steps which can be taken to help the UK this winter.”

National Grid warned earlier this month of energy shortages because the worst case state of affairs, if demand for vitality outweighs provide this winter, because of the ongoing international vitality disaster. See 6 October update.

According to the North Sea Transition Authority, the UK has a number of the lowest reserves of gasoline in Europe at 9 days. Germany reserves are at 89 days, whereas France’s are at 103 days and the Netherlands 123 days.

Recommencing using Rough is one technique the UK is utilizing to try to spice up vitality safety. Earlier this month, the UK authorities issued over 100 licences for oil and gasoline extraction within the North Sea. Critics say the transfer isn’t in step with international warming targets.

Mr O’Shea mentioned Centrica’s long-term purpose for reopening the Rough facility is,“delivering a net zero electricity system by 2035, decarbonising the UK’s industrial clusters, such as the Humber region by 2040, and helping the UK economy by returning to being a net exporter of energy.”

Prime Minister Rishi Sunak introduced in Prime Minister’s questions this week that he won’t raise the ban on fracking, the controversial technique of extracting gasoline from shale rock within the floor, which was proposed by his predecessor, Liz Truss, in September.

He has individually confirmed that he won’t attend the COP27 local weather summit in Egypt subsequent month.

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17 October: Support For Businesses Also Subject To Treasury Review

Today’s assertion on authorities financial technique from the brand new Chancellor, Jeremy Hunt, contained a bombshell announcement that the Energy Price Guarantee (EPG) will solely run as initially designed till April 2023.

As detailed within the tales under, the EPG caps the speed suppliers can change per unit of vitality and for related standing expenses, placing annual payments for a family with typical consumption at round £2,500. It had been scheduled to run till October 2024.

There are fears that common family vitality payments that don’t profit from authorities assist might prime £4,300 in April.

Mr Hunt has additionally served discover on the Energy Bill Relief Scheme, which offers assist for businesses and public establishments by discounting the wholesale value they are often charged. It will function as deliberate till April 2023 however any extension of assist will now be topic to shut scrutiny.

Both schemes will now be topic to a Treasury-led overview, with at this time’s assertion saying the Prime Minister and the Chancellor have agreed it might be irresponsible for the federal government to proceed exposing the general public funds to limitless volatility in worldwide gasoline costs.

Introducing the overview, Mr Hunt mentioned the purpose is to design a brand new method that can cost the taxpayer considerably lower than deliberate whereas making certain sufficient assist for these in want. He added that assist for businesses can be focused to these most affected, and that the brand new method will higher incentivise vitality effectivity.

Mr Hunt didn’t point out the Energy Bill Support Scheme, which is able to scale back all family electrical energy payments by £400 between now and March. The assumption is that this may proceed unchanged.

The Chancellor successfully reversed all of the measures contained within the 23 September mini-Budget from his predecessor, Kwasi Kwarteng, besides these already being introduced into play, specifically modifications to the Stamp Duty regime in England and Northern Ireland, and the discount to National Insurance Contributions beginning subsequent month.

This implies that the £400 assist scheme, which is able to see £66/£67 trimmed off electrical energy payments every month for six months, will survive untouched.

12 October: Law To Cap Renewable And Nuclear Producer Revenues

The Energy Prices Bill, which offers authorized footing for the federal government’s Energy Price Guarantee and related measures launched on 1 October, was launched to Parliament at this time with extra proposals for a restrict on how a lot income might be made by low-carbon electrical energy mills, writes Candiece Cyrus.

The Cost-Plus Revenue Limit will cap the quantity that may be earned by electrical energy mills which use renewable and nuclear energy. The authorities is consulting on the small print of the scheme forward of its introduction in England and Wales subsequent yr.

At current, wholesale vitality costs are set as regards to the costliest cost of era, which is presently pure gasoline, the value of which has been pushed up as a consequence of the warfare in Ukraine. Crucially, all electrical energy mills obtain this prime charge, even when they use a less expensive energy supply.

This means households don’t profit from the decrease cost of electrical energy manufacturing from renewables and nuclear. The authorities is subsequently aiming to interrupt the hyperlink between using pure gasoline in electrical energy era and the value of electrical energy generated by different means.

In its evaluation of the Bill, vitality market analyst Cornwall Insights mentioned of the restrict: “The scheme will be applied to all excess revenues renewable generators are receiving and will still allow them to cover their costs and receive an appropriate revenue that reflects their operational output, investment commitment and risk profile.”

The authorities has refuted claims that the scheme is a windfall tax on vitality mills by arguing it’s a tax on extra income, not all income made by the businesses.

Laying the Bill earlier than Parliament, Jacob Rees-Mogg MP, business secretary, mentioned: “Businesses and consumers across the UK should pay a fair price for energy. With prices spiralling as a result of Putin’s abhorrent invasion of Ukraine, the government is taking swift and decisive action.”

Under the Energy Price Guarantee, annual vitality payments for households with common ranges of consumption can be round £2,500.

Without the intervention, vitality unit prices below business regulator Ofgem’s value cap have been predicted to rise to almost £3,550 this month, £5,400 in January subsequent yr and better nonetheless in April.

The new Bill additionally offers authorized standing to the Energy Bills Support Scheme which offers £400 to eligible households to assist pay for vitality all through winter and the Energy Bill Relief Scheme for businesses.

It additionally covers authorities assist for households which aren’t on the mains gasoline grid, and use various types of vitality, and ensures landlords who’re benefiting from its assist are fined in the event that they overcharge their tenants for vitality.

11 October: Octopus Energy And OVO To Pay Customers To Cut Usage

Energy suppliers Octopus Energy and OVO pays clients to scale back vitality utilization this winter, writes Candiece Cyrus.

Octopus Energy has devised a scheme which is able to reward clients who reduce on their utilization throughout specified two-hour slots.

Only its 1.4 million sensible meter clients and round 5,000 of its business clients who’ve meters that may ship common readings will be capable of participate.

OVO will reward its clients on sensible meters for utilizing extra vitality exterior peak occasions of 4pm to 7pm.

Octopus and OVO are among the many vitality suppliers which might be planning to work with National Grid to deal with the potential downside of vitality demand outstripping provide throughout the colder months.

Last week National Grid warned that deliberate energy cuts could also be essential in a worst-case state of affairs, akin to vitality imports from Europe to the UK being compromised because of the worldwide vitality disaster. See updates under.

The scheme can even increase using vitality from renewable sources by encouraging clients to change consumption exterior peak hours. During peak intervals renewable vitality assets are stretched that means extra vitality produced from fossil fuels is shared throughout the Grid.

Octopus Energy’s scheme, Saving Sessions, will begin subsequent month and can run till March 2023.

The provider trialled the scheme between February and March this yr with over 100,000 clients who have been contacted prematurely to inform them of two-hour slots throughout which they need to restrict their vitality utilization as demand for vitality was excessive.

On common, every buyer diminished their vitality utilization by 0.7 kilowatt hours (kWh), per two-hour slot. This saved them on common 23p every time. Some clients on costly fastened tariffs saved as much as £4.35 on every event.

However, this winter the agency says National Grid is more likely to pay out £3 to £6 per kWh of diminished consumption, with the common buyer being rewarded £4 per kWh. Customers are more likely to be paid extra, on days the Grid is probably the most stretched.

Greg Jackson, chief govt of Octopus, mentioned: “Instead of cutting-off complete chunks of the nation if we’re in need of gasoline, we will reward individuals for utilizing much less vitality at occasions of peak demand.

“By doing so, we can make blackouts a thing of the past, and bring costs down for everyone.”

While OVO and quite a few different vitality suppliers are in talks with the National Grid to supply comparable schemes, OVO can be launching a separate trial scheme, Power Move, geared toward saving its clients money and utilizing greener vitality.

The scheme, which is able to run between 1 November and 31 March 2023, pays clients who’re on sensible meters, that are ready present vitality consumption in real-time, to make use of extra vitality exterior 4pm to 7pm. This is the interval when the common family sometimes makes use of 19% of the general quantity of vitality they devour in a day.

OVO can be asking clients participating within the scheme to scale back their common consumption throughout these hours this era to lower than 12.5% to assist use extra renewable vitality.

For the common family, this might require doing three a great deal of washing per week exterior of the height hours. Each family that meets the goal every month can be rewarded with a median of £20.

OVO will contact its clients to use for the scheme from mid October.

Octopus Energy sensible meter clients can signal as much as its Savings Sessions scheme online.

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9 October: No Medical Exemptions If Winter Outages Occur

The Energy Networks Association, which represents firms working the UK’s electrical energy and gasoline infrastructure, has supplied extra element on how the nation would possibly deal with energy cuts this winter.

There could be no exemptions from cuts for households depending on electrical energy for medical tools. Those in such circumstances are being requested to make sure they’ve sufficient back-up amenities and to contact their healthcare supplier for extra info and steerage.

National Grid, which has general duty for gasoline and vitality provide, urged earlier this week that coordinated, managed nationwide energy cuts is likely to be essential to stave off the potential of random blackouts if vitality demand outstripped provide (see story under).

No cuts are deliberate at current, however National Grid assessed what motion is likely to be required in a worst-case state of affairs triggered by a scarcity of imported vitality from Europe to the UK due to the worldwide vitality disaster.

Planning cuts prematurely and giving individuals prior warning means provide might be focused to these in most urgent want. If an emergency energy reduce is applied, clients in sure places would sometimes be with out energy for round three hours per day throughout the emergency.

The Networks Association says ‘protected sites’ akin to air visitors management centres and main hospital amenities with accident and emergency departments could be exempt from emergency deliberate energy cuts.

Crucially, residential clients wouldn’t be exempt. This would imply clients who’re medically depending on electrical energy to energy important tools would want to depend on the backup energy sources they have already got in case of energy outages.

Customers who require a steady provide of electrical energy for medical causes and who would want medical assist throughout an influence reduce, are being advised to hunt recommendation from their native well being service supplier.

If the choice is taken to implement emergency energy cuts, public info statements can be made, and clients will be capable of discover if and the way they’re affected on this web site – www.powercut105.com – by getting into their postcode.

National Grid stays assured there can be sufficient electrical energy provides by way of the winter with out the necessity to introduce energy cuts. As detailed under, it’s introducing the Demand Flexibility Service to incentivise households and businesses to scale back consumption of electrical energy between the height hours of 4pm – 9pm.

Starting on 1 November, the scheme – which can be managed by vitality suppliers – might see taking part households with sensible meters paid as much as £10 a day for utilizing home equipment at off-peak occasions.

6 October: Demand Flexibility Service Aims To Cut Peak Demand

Fears of energy cuts this winter have prompted National Grid to develop a scheme that can reward vitality clients for lowering consumption if the community infrastructure supplier spots that the hole between demand and available provide is narrowing.

The Demand Flexibility Service, scheduled to begin on 1 November and run till March 2023, has been devised by National Grid working with vitality suppliers, the market regulator Ofgem and the federal government.

Energy-intensive industries are the first goal of the service, though suppliers might supply ‘time of use’ incentives to households who, for instance, decide to utilizing home equipment akin to washing machines and tumble dryers exterior peak consumption intervals.

Participants would want electrical energy sensible meters to permit their consumption patterns to be precisely monitored in actual time. Reports say taking full benefit of the scheme might be price £10 a day.

Suppliers are being requested to contact clients to make sure most participation within the scheme when it’s launched.

National Grid says that, with out the proposed reductions in peak-period consumption, chilly days with little wind to energy generators might lead to the necessity to “interrupt supply to some customers for limited periods of time in a managed and controlled manner.”

It says energy cuts could be unavoidable if provides of electrical energy and pure gasoline to the UK from Europe have been interrupted: “It would imply that some clients might be with out energy for pre-defined intervals throughout a day – usually that is assumed to be for 3 hour blocks.

“This would be necessary to ensure the overall security and integrity of the electricity system across Great Britain. All
possible mitigating strategies would be deployed to minimise the disruption.”

Suppliers could be tasked with figuring out ‘vulnerable’ clients, akin to these reliant on powered medical tools. However, solely key infrastructure factors, akin to air visitors management centres and accident and emergency amenities, could be assured uninterrupted provide.

Extra use of coal-fired energy stations can be being lined-up to safe provides.

The root reason for the provision difficulty is the battle in Ukraine and what National Grid calls “unprecedented turmoil and volatility in energy markets in Europe and beyond and shortfalls of gas in continental Europe”.

It says these might have a variety of knock-on impacts in Britain, together with blackouts, with wholesale costs remaining at report excessive ranges for the foreseeable future.

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1 October: Government Intervention Limits Scale Of Price Hike

Today – 1 October – marks the primary day of the federal government’s Energy Price Guarantee, the substitute for the value cap that has been managed by Ofgem, the market regulator, since its introduction in 2019.

The Guarantee limits the quantity suppliers can cost for every unit of gasoline and electrical energy utilized by a family within the UK, in addition to every gas’s standing cost. It can be in place for 2 years.

Importantly, it doesn’t restrict the scale of payments themselves. The quantity owing to suppliers will at all times be decided by the quantity used.

The determine of £2,500 a yr that’s related to the Guarantee is the quantity of a typical 12-month invoice for a family with what’s deemed to be ‘average’ consumption over a yr: 12,000 kWh of gasoline, and a pair of,900 kWh of electrical energy.

Average payments below the Ofgem cap, had it come into impact at this time, would have reached almost £3,550 earlier than leaping once more to round £5,400 in January and better nonetheless in April.

Soaring payments are blamed on the steep improve within the value of pure gasoline on wholesale markets, itself attributed to the choking-off of provide from Russia to the West on account of the warfare in Ukraine.

While the Guarantee delivers substantial financial savings on the shelved Ofgem cap, it is going to nonetheless lead to greater costs than the cap which ended on 30 September. This placed common annual payments at £1,971.

According to Citizens Advice, debt issues might lead to vitality suppliers transferring over 450,000 clients onto prepayment meters this winter.

The charity says the 4 million households with prepayment meters are every more likely to spend an additional £258 within the coming months relative to these on credit score meters who pay in arrears by direct debit, cheque or money.

As is the case with the earlier value cap, below the Energy Price Guarantee prepayment meter clients pays a barely greater unit value than these with credit score meters.

All households can even profit from a one-off £400 discount of their electrical energy payments, mechanically utilized over the months October 2022 to March 2023.

This will convey the common invoice all the way down to £2,100.

Those not on the gasoline grid will obtain £100 in the direction of the cost of the gas they use in its place.

You can discover full particulars of the Energy Price Guarantee, along with a historical past of the ill-starred Ofgem cap, on this Q&A function and within the protection under.

The authorities is extending assist to business vitality customers by way of the Energy Bills Support Scheme – once more, you’ll discover particulars under.

27 September: Firms Told To Help Customers Through Tough Winter

Energy corporations should enhance the way in which they deal with vulnerable clients and people struggling to pay their payments following the publication of a overview by regulator Ofgem.

This contains figuring out these in issue, offering extra assist, and operating further checks to make reimbursement programmes life like for purchasers, writes Candiece Cyrus.

Ofgem discovered that TruEnergy, Utilita and ScottishPower have ‘severe weaknesses’ in the way in which they assist clients in cost difficulties.

Its most recent Market Compliance Review discovered that one other 5 corporations (E, Good, Green Energy, Outfox the Market and Bulb), have points within the assist they supply to clients struggling to pay their payments.

Eight suppliers (Ecotricity, EDF, E.ON, Octopus, OVO, Shell, Utility Warehouse and So Energy/ESB Energy), have ‘minor’ points. 

Only British Gas was discovered to have ‘no significant issues’. Utilita and ScottishPower are being issued with enforcement notices, requiring ‘specific and urgent actions’.

In July, Ofgem issued TruEnergy with a Provisional Order compelling it to take motion to make sure that its direct debit coverage and processes are match for objective, and to make sure that buyer direct debits are set on the proper stage. No additional motion has been outlined in opposition to the agency for the second.

The latest Ofgem market overview discovered that, throughout the business, points ranged from inferior coaching in how one can assist and establish vulnerable clients – those that are of pension age or disabled, for instance – to a scarcity of readability on how cost plans are reassessed if a buyer’s scenario modifications.

The regulator has despatched finest observe info to all vitality suppliers alongside a letter outlining its expectations, together with:

making certain that their clients can simply contact them and are handled pretty
figuring out vulnerable clients and offering them with extra assist if essential
setting reasonably priced reimbursement charges and checking if clients have the power to pay earlier than force-fitting prepayment meters.

Jonathan Brearley, Ofgem CEO, mentioned: “We have reviewed suppliers on how they assist clients who’re having hassle paying their payments, significantly those that are vulnerable, and located some suppliers have fallen in need of the requirements Ofgem expects.

“We accept that there are many pressures on energy companies in the market this winter, but the needs of vulnerable customers must be part of their top priorities. We will now work with companies on where they can improve.”

Dame Clare Moriarty, chief govt of Citizens Advice, mentioned: “Today’s overview cements what struggling clients already know: some vitality firms are falling drastically in need of the mark. This is totally unacceptable given the massive cost-of-living pressures individuals are going through.

“Suppliers need to up their game and Ofgem needs to hold them to task. With a tough winter ahead we must also see a ban on backdoor disconnection tactics like pushing people in debt onto prepayment meters.”

Data from Citizens Advice revealed extra clients are unable to prime up their prepayment meter this yr than within the final three years mixed.

The charity’s Market Meltdown report discovered that the variety of Ofgem workers working to guard clients from poor provider observe fell by 25% between 2017/18 and 2020/21, though there have been a report variety of vitality corporations available in the market at the moment.

From 1 October, the federal government will freeze vitality payments at £2,500 a yr for the following two years, for the common family, with each family moreover receiving a £400 low cost on their electrical energy invoice between October and March 2023.

Low earnings households may be entitled to cost of living payments.

Ofgem’s subsequent market overview into buyer vulnerability can be printed later this yr.

22 September: Gas Extraction Ban Lifted To Boost Energy Security

The UK authorities has at this time lifted the 2019 moratorium on fracking – a controversial technique of extracting shale gasoline from deep beneath the earth.

The transfer was signalled by the Prime Minister when she unveiled the Energy Price Guarantee to the House of Commons on 8 September. Confirmatory particulars have since been delayed by the interval of mourning for Queen Elizabeth.

Despite considerations linking hydraulic fracturing (‘fracking’) to earth tremors, the beforehand banned approach can be allowed to renew following an announcement from the Department of Business, Energy and Industrial Strategy (BEIS).

The division says ending the moratorium will assist preserve the UK’s vitality safety given the battle in Ukraine, which has pushed up costs on wholesale markets.

Jacob Rees-Mogg MP, business secretary, mentioned: “In mild of Putin’s unlawful invasion of Ukraine and weaponisation of vitality, strengthening our vitality safety is an absolute precedence, and – because the Prime Minister mentioned – we’re going to make sure the UK is a internet vitality exporter by 2040.

“To get there we will need to explore all avenues available to us through solar, wind, oil and gas production – so it’s right that we’ve lifted the pause [on fracking] to realise any potential sources of domestic gas.”

Fracking entails drilling into the earth earlier than injecting a high-pressure mixture of water, sand and chemical compounds into rock to launch shale gasoline.

The approach made headlines yesterday when the founding father of Cuadrilla, the UK’s first fracking firm, mentioned Britain’s geology made fracking unimaginable at any practical scale.

Scientific consensus on the dangers related to fracking are unchanged for the reason that introduction of the moratorium in 2019.

Companies with fracking permits should pause their operations in the event that they detect tremors of greater than 0.5 in magnitude. Earthquakes might be felt at magnitudes above 2.0.

Friends of the Earth campaigner Danny Gross says fracking places communities in danger and would have a negligible influence on family vitality payments.

He mentioned: “Ripping up the principles that shield individuals from fracking would ship shockwaves by way of native communities.

“This announcement suggests that the government is planning to throw communities under the bus by forcing them to accept ‘a higher degree of risk and disturbance’.”

The authorities mentioned fracking exercise should acquire native assist. Developers might want to have the mandatory licences, permissions and consents in place earlier than they’ll start operations.

21 September: Six-Month Scheme To Support Non-Domestic Customers

Business Secretary Jacob Rees-Mogg MP has at this time given additional particulars of the six-month authorities assist package deal for all UK businesses, charities and public sector organisations, akin to faculties and hospitals, that are grappling with spiralling vitality payments.

The Energy Bill Relief Scheme will reduce the value of wholesale gasoline and electrical energy for all non-domestic clients. Support can be equal to the Energy Price Guarantee (EPG) for home shoppers introduced on 8 September by Prime Minister, Liz Truss (see story under).

The new measures will apply to fastened business contracts agreed on or after 1 April 2022 and to current default, variable and versatile tariffs and contracts. No motion is required by bill-payers to profit from the deal.

The business vitality market has operated with out an equal to the value cap that was launched into the home market in 2019, and which can be supplanted by the EPG on 1 October 2022.

The business vitality invoice scheme can even apply to vitality utilization from 1 October 2022 and can run till 31 March 2023. The authorities says businesses will see a discount of their October payments, that are sometimes obtained in November.

As with the home EPG, the federal government will mechanically apply a reduction to the value per kilowatt hour (kWh) of gasoline and electrical energy utilized by businesses.

To this finish, it has set a Supported Wholesale Price which is anticipated to be £211 per megawatt hour (MWh) for electrical energy and £75 per MWh for gasoline (the value can be confirmed on 30 September). This would equate to kWh costs of 21.1 pence for electrical energy and seven.5 pence for gasoline. Bills would additionally embrace the provider’s standing cost, as at current.

The authorities says its supported value stage can be lower than half the wholesale costs anticipated this winter. Part of the funding for the scheme can be supplied by the removing of inexperienced levies presently paid by non-domestic clients.

Green levies have additionally been faraway from home vitality payments from October. The levies will quickly be met from common taxation.

Reflecting the complexity of the non-domestic vitality market, the extent of value discount for every business/charity/public sector physique will fluctuate in line with its contract sort and circumstances:

Those on current fastened value contracts can be eligible for assist the place the contract was agreed on or after 1 April 2022. If the wholesale factor of the agreed value is above the brand new supported value, the per-unit prices will mechanically be diminished by the related value per kWh throughout the Scheme.
Customers getting into new fastened value contracts after 1 October will obtain assist on the identical foundation.
Those on different tariffs, together with variable charge offers, will obtain a per-unit low cost that can fluctuate over the six-month interval however which is able to mirror the distinction between the supported value and the common anticipated wholesale value over the interval. The authorities says non-domestic clients on variable tariffs will subsequently pay diminished payments, however these will nonetheless change over time and should be topic to cost will increase.
The authorities is working with suppliers to make sure all clients in England, Scotland and Wales are given the chance to change to a set contract/tariff throughout the scheme if they need, underpinned by the Energy Bill Relief Scheme assist.
Businesses with versatile buy contracts will see payments diminished in line with the specifics of their contract.
A parallel scheme, based mostly on the identical standards and providing comparable assist, however recognising the totally different market construction, can be established in Northern Ireland.
Support can even be supplied to non-domestic clients which aren’t related to both the gasoline or electrical energy grid and who use heating oil or various fuels as a substitute of gasoline. Further particulars will observe.

The six-month scheme can be reviewed after three months to find out whether or not focused assist needs to be supplied to chose non-domestic clients after March 2023. The authorities’s home assist package deal is scheduled to run for 2 years from 1 October 2022.

The hospitality business has been significantly vocal in highlighting the probability that pubs, golf equipment and eating places would shut if not assist have been forthcoming.

Kate Nicholls, head of the UK Hospitality commerce physique, welcomed the announcement however mentioned assist could be required past the six-month lifetime of the brand new scheme: “We will continue to work with the government to ensure there is no cliff edge when these measures fall away.”

Mr Rees-Mogg mentioned the federal government can even deal with bettering the UK’s vitality self-sufficiency: “The measures we are taking to boost the amount of domestic energy we produce will improve both energy security and supply and will increase growth, protect jobs and support families with their cost of living this winter.”

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21 September: Domestic Support Confirmed For N Ireland, Park Homes, Tenants And Heating Oil Users

More particulars have emerged of the federal government’s Energy Price Guarantee (EPG), which was introduced by the Prime Minister on 8 September as a approach to restrict common annual family payments to £2,500 for 2 years from 1 October.

On the identical day it supplied particulars of its Energy Bill Relief Scheme for non-domestic clients (see story above), the Department for Business, Energy & Industrial Strategy confirmed that equal gasoline and electrical energy invoice assist can be supplied to households in Northern Ireland.

The vitality market in Northern Ireland is structured otherwise to the remainder of the UK, and officers have used the time for the reason that authentic announcement to work out how one can put the assist measures in place.

The discount within the unit value of gasoline and electrical energy in Northern Ireland will take impact from November, however the authorities will backdate assist for October payments through payments in November. No motion is required to profit from the assist.

All households within the UK, together with Northern Ireland, can even obtain a £400 low cost on payments throughout the six months from October 2022 to March 2023, bringing the common invoice all the way down to £2,100 for 2022/23.

The scope of this low cost can be prolonged to incorporate park home residents and tenants whose landlords pay for his or her vitality through a business contract. The authorities is to introduce laws to ensure landlords cross the low cost on to tenants who pay all-inclusive payments.

An extra cost of £100 can even be made to over a million UK households who usually are not on the gasoline grid and who use various fuels akin to heating oil, which has additionally risen in value in recent months.

12 September: Average Domestic Bills Capped At £2,500 A Year For Two Years

Addressing the House of Commons final week, Prime Minister Liz Truss introduced a package deal of measures designed to assist households and businesses going through crippling vitality invoice will increase.

She additionally mentioned the UK will enhance vitality self-sufficiency by way of better use of nuclear energy, elevated extraction of oil and gasoline from the North Sea, the ending of a moratorium on fracking, and continued funding in renewables akin to hydrogen, photo voltaic and wind.

The details of the federal government’s radical intervention within the vitality market embrace:

An Energy Price Guarantee for home clients on normal variable charge tariffs to be set at £2,500 every year for the following two years for these with typical consumption ranges, beginning on 1 October. This supersedes the regulator Ofgem’s value cap, which was scheduled to maneuver from £1,971 to £3,549 on that date.
The beforehand introduced £400 electrical energy invoice low cost, available to all households, will apply this winter, bringing the common invoice all the way down to £2,100 for 2022/23. The low cost can be a deduction off payments on the charge of roughly £66 a month.
As issues stand, the common invoice in 2023/24 would be the full £2,500.
The Guarantee is successfully a cap on gasoline and electrical energy unit costs and on standing expenses for every gas, so precise payments can be decided by utilization.
The £2,500 determine contains the removing of inexperienced levies at round £150 per invoice.

Unit costs

The new common electrical energy value per unit can be 34.0 pence per kWh from 1 October. This is a rise from the present 28.3 pence however decrease than the 51.8 pence allowed for by the revised however deserted Ofgem value cap.
The new common gasoline value per unit can be 10.3 pence per kWh from 1 October (presently 7.4 pence, it might have risen to 14.8 pence below the deserted cap).
The common value displays the truth that there are regional variations throughout the UK attributable to various infrastructure prices.
Standing expenses for electrical energy will rise on 1 October from 45.3 pence to 46.36 pence per day (common). For gasoline, the rise is from 27.2 pence to twenty-eight.49 pence per day (common). These will increase match what was contained within the Ofgem cap.

Fixed tariffs

Those on a set tariff at the next charge than the Price Guarantee can have their unit costs diminished by 17p/kWh for electrical energy and 4.2p/kWh for gasoline.
These unit costs have been handed to suppliers to make sure that they’re used to calculate payments on time for 1 October. Energy suppliers will alter fastened tariffs mechanically.
Customers on fastened tariffs don’t have to take any motion to get the advantages of this scheme.
The purpose is for these on fastened tariffs to acquire the identical £1,000 saving on the proposed however now deserted Ofgem value cap.

Other vitality customers

Consumers utilizing heating oil or LPG and people residing in park properties or shared vitality grids can even obtain monetary assist – such customers have beforehand not benefited from a value cap.
The authorities says it’s working to make sure that tenants who pay for his or her vitality as a part of their lease acquire the advantages of the Price Guarantee.
Support can be supplied to vitality shoppers in Northern Ireland, who haven’t been coated by the Ofgem value cap, which applies to England, Scotland and Wales.

Business customers

There can be a six-month assist scheme for businesses, with particulars to be introduced.
This will embrace assist for charities and public buildings akin to faculties and libraries.

Other measures

Previously introduced monetary assist for these on sure means-tested advantages, pensioners and the disabled, will proceed to be paid.
Around 100 new exploration licences can be granted to firms wishing to access gasoline and oil reserves within the North Sea.
Under the auspices of GB Nuclear, round 25% of UK electrical energy can be generated by nuclear energy by 2050.
The 2019 moratorium on drilling for shale gasoline – generally known as fracking – can be ended, however native communities can be requested to assist tasks earlier than they’ll go forward.
The regulation of the vitality market can be reviewed, placing the function of Ofgem below the highlight.
Action can be taken to decouple the value of electrical energy from the cost of the costliest technique of era. At current, the value of electrical energy is ready in line with the cost of utilizing gasoline, which suggests different mills utilizing inexpensive means obtain a disproportionately excessive quantity.
The Treasury and Bank of England have established a £40bn Energy Markets Financing Scheme which is able to present emergency funding to vitality firms in the event that they require short-term money injections to assist their buying and selling positions in wholesale markets. The lending scheme is designed to stop any additional vitality firms going bust – round 30 have gone to the wall for the reason that starting of final yr.

The Prime Minister didn’t present particulars of how the assorted measures can be funded, though the Chancellor mentioned final week there would inevitably be greater authorities borrowing within the quick time period. Any prospect of a windfall tax on vitality producer income has been dominated out by Ms Truss.

The Chancellor is anticipated to supply additional particulars when he makes a fiscal assertion – successfully a mini Budget – later this month.

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7 September: Prime Minister Set To Unveil Support Package

Prime Minister Liz Truss has dominated out a windfall tax on vitality producers as a means to assist fund the multi-billion pound cost of freezing vitality payments. Details of how the federal government will deal with the vitality affordability disaster can be introduced by Ms Truss tomorrow.

Pressed on the matter of utilizing a windfall tax as a revenue-generating mechanism at Prime Minister’s Questions at this time, she mentioned the UK “cannot tax its way to growth”, arguing that greater business taxes served as a deterrent to worldwide funding.

This means funding for the measures to be revealed tomorrow will both have to come back from a levy on vitality payments for years to come back, or from common taxation.

Former Chancellor Rishi Sunak imposed a £9bn windfall tax on BP and Shell in May to assist fund his package deal of monetary help to assist with the cost of residing disaster, together with the £400 vitality invoice low cost that each family is presently resulting from obtain in levels between October and March 2023.

His newly-appointed successor, Kwasi Kwarteng, has conceded that authorities borrowing might want to improve to pay for intervention within the vitality market.

Ms Truss promised “immediate action” on vitality, saying she needed to provide households certainty that they’d be capable of afford their payments and get by way of the approaching winter.

But she mentioned the present scenario wants greater than a “sticking plaster” method, with motion required to spice up UK vitality resilience by way of elevated oil and gasoline manufacturing within the North Sea and the building of latest nuclear energy stations.

Crucially, she mentioned assist could be supplied to businesses, a lot of which have seen payments rise by 500% when renewing their contracts. Unlike the home vitality market, there isn’t any value cap on business vitality provide.

And in response to a query from Victoria Atkins, MP for Louth & Horncastle in Lincolnshire, about households that depend on heating oil, the place there isn’t any value cap, reasonably than mains gasoline, Ms Truss mentioned tomorrow’s announcement would handle the considerations of all vitality customers.

The Prime Minister additionally mentioned that, in coping with the problems going through the vitality market, she can be trying on the means the market is regulated. Ofgem, the regulator, has confronted criticism from MPs and others for failing to make sure the monetary power of vitality suppliers, 29 of which have gone bust up to now 18 months.

In addition to ruling out a windfall tax, Ms Truss advised MPs that she intends to reverse the rise in National Insurance Contributions launched by Mr Sunak in April and to cease the proposed improve in Corporation Tax.

6 September: Prime Minister Liz Truss Promises Action On Energy This Week

In her speech exterior 10 Downing Street earlier at this time, Prime Minister Liz Truss promised motion to deal with vitality payments later this week, laying the blame for the vitality disaster on the door of Vladimir Putin and his invasion of Ukraine.

The scheduled 80% improve within the vitality value cap on 1 October – from £1,971 to £3,549 a yr for a family with typical consumption – is a spotlight of consideration throughout the political and social spectrum, and the consensus is that pressing motion is required.

Ms Truss is alleged to be finalising plans to freeze costs at or near their present stage for a interval of three or six months. While this may be an enormous reduction to thousands and thousands of households who’ve been staring down the barrel of unaffordable payments, it is going to nonetheless go away vitality prices painfully excessive.

The cost of presidency intervention – maybe within the type of loans to vitality suppliers to permit them to purchase costly gasoline on wholesale markets with out passing on the cost to home clients – is estimated to be no less than £100bn.

It is assumed this can be repaid by imposing a levy on home payments for as much as 20 years – a controversial transfer, particularly provided that there isn’t any guarantee that wholesale costs will fall from their present ranges any time quickly.

There are additionally requires the federal government to behave on business vitality payments, the place there isn’t any cap on costs. Many corporations are actually reportedly going through payments 5 occasions greater than beforehand. Inevitably, these greater prices are feeding by way of to retail costs and fuelling the cost of residing disaster – inflation stands at 10.1% and if forecast to rise greater.

Action right here might embrace the introduction of a cap on unit prices, or a short lived discount or suspension of the 20% charge of VAT that almost all firms pay on their vitality payments.

Ms Truss additionally mentioned she was eager to see “spades in the ground” as a approach to increase the nation’s safety of vitality provide. In the absence of different particulars, there’s hypothesis that this might sign a forthcoming inexperienced mild for fracking, the deeply controversial technique of gasoline extraction that’s mentioned by critics to break native properties.

She additionally promised tax cuts alongside funding in hospitals, properties, roads and broadband infrastructure, in addition to a renewed deal with the NHS.

In the cupboard appointments that adopted this afternoon’s speech, Ms Truss appointed Kwasi Kwarteng MP, who was business secretary below Boris Johnson, to be Chancellor of the Exchequer. Jacob Rees Mogg MP has been appointed business secretary.

5 September: Detailed Plans To Tackle Energy Crisis Expected In Days

Liz Truss, who will succeed Boris Johnson as Prime Minister tomorrow (Tuesday), has promised to ‘deliver’ on the UK vitality disaster whereas slicing taxes and rising the financial system.

In her temporary speech on the announcement of the winner of the Conservative Party management contest – she polled 80,326 votes, with Rishi Sunak on 60,399 – she promised a ‘bold plan’ to deal with the nation’s financial woes.

Further particulars of her proposals for vitality costs can be revealed later this week, however she mentioned she would focus on “dealing with people’s energy bills but also dealing with the long term issue we have on energy supply.”

One possibility rumoured to be on Ms Truss’ checklist is for home vitality payments to be frozen at at this time’s ranges, with the deliberate improve within the Ofgem value cap on 1 October (see tales under) being shelved.

This might cost an estimated £100bn, though the money might be recouped by way of a levy on vitality payments over 15 or 20 years or partly by imposing a windfall tax on oil and gasoline producing firms.

There may be extra focused assist for households on decrease incomes.

Ms Truss may need to present reduction to business customers, who’re already seeing costs escalating quickly as there isn’t any cap on business vitality payments.

One measure right here might be the non permanent discount or removing of VAT on business vitality payments. This would save most corporations 20% (VAT on home payments is 5%).

In phrases of tackling vitality provide points, which have been uncovered by the UK’s heavy use of costly pure gasoline, Ms Truss might contemplate:

elevated funding in renewable vitality sources akin to photo voltaic, wind, wave and tidal
enlargement of the UK’s fleet of nuclear energy stations, together with modular models requiring much less building time
approval for controversial fracking schemes, which extract gasoline from shale rock deposits
subsidised vitality saving measures throughout UK housing inventory, together with improved insulation and set up of photo voltaic panels.

Sir Keir Starmer, chief of the Labour social gathering, mentioned “there can be no justification for not freezing energy prices”, saying there was a political consensus for such a transfer, and that Ms Truss solely has to work out how one can pay for it.

Labour favours the imposition on a windfall tax on the income of oil and gasoline producers.

1 September: Radical Action Proposed To Cut Bills, Reduce Consumption And Ensure Security Of Supply

OVO, the UK’s third largest vitality provider and a proponent of renewable electrical energy, has launched a 10-point plan to deal with steepling vitality payments.

It says a “compassionate and creative” method is required to handle the truth that households usually are not being given sufficient assist given the dimensions of the vitality market disaster.

The regulator, Ofgem, introduced final month that common annual costs will rise from below £2,000 to £3,549 when its value cap modifications on 1 October, with an additional improve in the direction of £6,000 a yr anticipated when the cap is subsequent up to date in January.

Prices are being pushed greater by a scarcity of pure gasoline on wholesale markets, largely as a result of Russia – Europe’s most important supply – is choking off provides because it wages warfare in Ukraine.

OVO says a technique is required to handle quick, medium and long-term points.

In the short-term it says:

The £400 Energy Bill Support Scheme rebate off all family electrical energy payments needs to be paid in full to households over the following three months and never unfold over six months.
A Fuel Poverty Task Force, consisting of charities,vitality firms and authorities departments, needs to be set as much as establish these most in want and supply them with a monetary security internet
Funding for debt advisory charities needs to be elevated to assist them deal with rising demand. OVO says Citizens Advice has seen a rise of greater than 1000% in individuals looking for recommendation on their vitality payments.

In the medium-term:

The prepayment meter premium, which sees 4 million clients pay round £59 extra per yr than clients paying by month-to-month direct debit, needs to be abolished, with Ofgem decreasing the unit charges to ensure a prepayment meter is the most affordable approach to pay for vitality.
Bills needs to be subsidised by way of a ‘Tariff Deficit Fund’ that might be repaid over a interval of years to clean out the shock of rocketing costs. OVO says: “This scheme can’t be open-ended and unlimited. It should be progressive just like the tax system. This can best be achieved through limiting the number of subsidised units of energy households receive, as higher-income households typically use more energy.”
Standing expenses, that are payable by all gasoline and electrical energy clients earlier than any vitality is used, needs to be abolished so payments mirror vitality used and reward vitality effectivity.
A nationwide vitality effectivity effort needs to be inspired to insulate properties nationwide to scale back consumption.

In the long-term:

The publicly-owned Future System Operator needs to be given a mandate for securing long run vitality demand for the UK as an entire, permitting a transfer away from short-term hedging methods utilized by suppliers for the time being.
The Department of Energy and Climate Change needs to be revived to make sure there’s a Secretary of State focussed on building a low-cost, low-carbon vitality system.
A carbon tax needs to be launched to scale back the UK’s dependence on fossil fuels and speed up the decarbonisation of all sectors of our financial system. It would tax the income of huge oil and gasoline firms on an ongoing foundation, reasonably than by way of a one-off windfall tax. OVO says such a tax would enable for environmental levies and VAT to be faraway from payments.

An announcement on how the federal government plans to deal with inflation and the cost of residing disaster is anticipated early subsequent week after the brand new prime minister – Liz Truss or Rishi Sunak – takes workplace on Monday.

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26 August: Ofgem Sets Price Cap At £3,549 From October

Ofgem, the vitality market regulator, has introduced that its value cap will rise to £3,549 on 1 October.

The cap limits how a lot vitality firms can cost per unit of vitality and for standing expenses, and the brand new determine represents the cost of annual payments for a family with typical utilization. It applies in England, Scotland and Wales.

Today’s cap stands at £1,971, and the massive improve will go away thousands and thousands of households struggling to pay their payments this winter. Another steep improve is anticipated in January, pushed by excessive wholesale gasoline costs.

Kevin Pratt, our vitality knowledgeable, mentioned: “Ofgem’s announcement that its cap will rocket to £3,549 – and £3,608 for properties on pre-payment meters – is not any shock, nevertheless it’s nonetheless a shock to see vitality payments hitting a stage simply shy of thrice what they have been in March, when the cap was £1,277.

“The blunt fact is that month-to-month vitality prices of practically £300 a month are merely unaffordable for low and center earnings households at a time when inflation throughout the financial system is operating at 10.1%. And as we all know, there’s worse to come back in January, when the cap is anticipated to hurtle previous £5,380, in line with Cornwall Insight.

Unbelievably, the analyst says it is going to prime £6,600 when the cap is reviewed in April 2023.

“With thousands and thousands of households going through gas poverty – when vitality prices exceed 10% of disposable earnings – it’s time for pressing authorities intervention in what’s clearly a market in deep disaster. This must occur now, properly prematurely of winter, so that folks keep away from the prospect of not with the ability to warmth their properties as temperatures drop.

“Whether the motion takes the type of government-backed loans that might allow suppliers to freeze costs at at this time’s stage, or the introduction of a subsidised social tariff for financially vulnerable households, it must occur earlier than October and should be a precedence for the brand new Prime Minister when she or he takes workplace on 5 September.

“In addition, we need a radical rethink of how we manage our energy needs on a national level. Wholesale gas prices won’t fall any time soon, so we need a long-term strategy to develop reliable and affordable alternatives, including nuclear power. And we need to make our housing stock, new and existing, more energy efficient so that we reduce consumption.”

The value cap applies to home properties. There is not any equal cap for business vitality clients, who’re seeing contract costs rising by an element of 10 in some circumstances.

This is forcing businesses into dire monetary straits, with rising fears that many must shut consequently. Others can have no selection however to cross on their elevated prices to their clients, additional fuelling rampant inflation.

Massive influence

Ofgem boss Jonathan Brearley, CEO of Ofgem, mentioned: “We know the huge influence this value cap improve can have on households throughout Britain and the troublesome selections shoppers will now need to make. I discuss to clients often and I do know that at this time’s information can be very worrying for a lot of.

“The value of vitality has reached report ranges pushed by an aggressive financial act by the Russian state. They have slowly and intentionally turned off the gasoline provides to Europe inflicting hurt to our households, businesses and wider financial system. Ofgem has no selection however to mirror these cost will increase within the value cap.

“The Government support package is delivering help right now, but it’s clear the new Prime Minister will need to act further to tackle the impact of the price rises that are coming in October and next year. We are working with ministers, consumer groups and industry on a set of options for the incoming Prime Minister that will require urgent action. The response will need to match the scale of the crisis we have before us. With the right support in place and with regulator, government, industry and consumers working together, we can find a way through this.”

Ofgem’s common vitality utilization based mostly on a family of two.4 individuals utilizing 2,900 kWh of electrical energy and 12,000 kWh of gasoline in a yr. This works out at 242 kWh of electrical energy and 1,000 kWh of gasoline per thirty days. Of course, that is simply the common consumption for a family of between 2-3 individuals.

25 August: Supplier Increases Fund Targeting Struggling Households

British Gas is to donate 10% of future income to its Energy Support Fund, with the money getting used to supply grants to financially vulnerable clients. It is feeding a right away £12 million into the fund to kickstart the supply of additional assist within the face of hovering payments.

The agency, a subsidiary of vitality big Centrica, made income of £98 million within the six months to June. The mother or father firm, which advantages from excessive costs on the sale of the oil and gasoline it produces, made income of £1.3 billion in the identical interval.

Ofgem, the vitality regulator, will announce a rise within the vitality value cap tomorrow (Friday), which is able to take impact in October. The cap is anticipated to rise from its present £1,971 a yr for a typical use family to over £3,500, earlier than rising once more in January to over £4,200.

British Gas says grants are anticipated to common £750 per family: “This will help the most financially vulnerable customers who are struggling to pay their bills this winter.”

British Gas clients in gas poverty – these spending greater than 10% of their earnings on vitality payments – and with lower than £1,000 in financial savings are eligible to use for a grant.

Grants between £250 and £750 are available to assist pay recipients pay their vitality payments. The common grant measurement is £550. Over a 3rd of the recipients are on incapacity profit whereas 30% are single dad and mom and 1 / 4 have youngsters below 5 years old.

British Gas already pays £6 million into the fund annually, with extra contributions made to fund particular tasks.

There are rising requires the Ofgem value cap to be frozen, with excessive prices met by way of authorities intervention (see story under). No announcement on authorities coverage to deal with the vitality disaster afflicting each home and business clients is anticipated earlier than the appointment of the following prime minister on 5 September.

Shell Compensates Overcharged Prepayment Customers

Shell Energy is refunding and compensating 11,275 prepayment clients who have been overcharged between January 2019 and September 2022. Refunds can be issued mechanically to affected clients.

Ofgem, the market regulator, says the entire quantity of buyer detriment to be refunded is £106,000. The common quantity being refunded to affected clients is £9.40.

In addition, the provider pays £400,000 to Ofgem’s voluntary client redress fund and £30,970 in goodwill funds to affected clients, equating to a complete cost of £536,970.

In 2019 Shell Energy, buying and selling as First Utility on the time, agreed to refund and compensate 12,000 buyer accounts it overcharged when the Ofgem value cap was launched.

23 August: Energy Chief Proposes £100 Billion Package To Freeze Bills

Keith Anderson, chief govt of Scottish Power, is spearheading the drive to acquire authorities backing for a £100-billion package deal that might freeze vitality payments at at this time’s costs for 2 years whereas enabling vitality suppliers to pay the present excessive cost of pure gasoline on wholesale markets.

According to stories on the BBC, Mr Anderson has mentioned his thought with Kwasi Kwarteng MP, the business secretary who’s tipped to change into Chancellor in Liz Truss’s authorities if she wins the battle to guide the Conservative Party and thus change into Prime Minister on 5 September.

Ofgem, the vitality market regulator, is warning individuals to look out for rip-off emails being despatched out in its identify. In a tweet at this time (24 August), it mentioned: “There’s reports thieves are emailing consumers saying they’re from Ofgem & asking for direct debit details to refund the winter energy repayment THIS IS A SCAM Check links & be #ScamAware.”

The £400 authorities winter vitality cost referred to will mechanically be deducted from electrical energy payments over the course of the winter, so there isn’t any have to ship info to be able to qualify or obtain it.

Mr Anderson is to share his proposals with Scotland’s First Minister, Nicola Sturgeon, and different vitality firms.

The suggestion is that the federal government will guarantee loans of as much as £100 billion on behalf of vitality suppliers, enabling them to borrow from business lenders at aggressive charges. They would then use this money to purchase gasoline at traditionally excessive wholesale costs with out passing on the cost to shoppers.

The authorities money – termed the ‘deficit fund’ – would then service the money owed, with the fund being repaid by both a levy on vitality payments unfold over a number of many years, or from common taxation.

Under the plan, there could be no improve within the vitality value cap from its current stage of £1,971 a yr for a typical family with common consumption. Ofgem, which administers the cap, is because of announce the brand new stage of the cap, to take impact on 1 October, this Friday, 26 August.

Ofgem adjusts the cap to mirror the prices confronted by suppliers on wholesale markets. It is broadly anticipated to rise to over £3,500 in October earlier than growing once more in January 2023 and April 2023, with analysts saying it might rise in the direction of £6,000 a yr due to hovering wholesale costs.

These costs are largely being pushed by reductions in provide from Russia, the most important provider of pure gasoline to Europe. It plans to shut the Nord Stream 1 pipeline to Germany for 3 days subsequent week, purportedly for routine upkeep, though there are suspicions that Russia is utilizing provide constraints to trigger political and financial unrest.

In February, Mr Anderson urged the institution of a social tariff priced under cost and available to low earnings households (see story under). However, the escalating scale of probably value will increase is threatening thousands and thousands of households on comparatively excessive incomes with extreme monetary hardship, therefore the promotion of the deficit fund answer.

18 August: Energy Regulator Under Fire For ‘Not Putting Consumers First’

A director has stop her put up on the UK’s vitality regulator in protest over modifications to the way in which it really works out the vitality value cap, writes Andrew Michael.

Christine Farnish, a non-executive director of Ofgem, tendered her resignation to the business secretary, Kwasi Kwarteng MP, at first of August.

Ms Farnish mentioned she was stepping down from the function she joined in 2016 as a result of she didn’t consider the regulator had “struck the right balance between the interests of consumers and the interests of suppliers”.

The cap limits how a lot gasoline and electrical energy corporations can cost for models of vitality and standing expenses. It is forecast to rise considerably this October to over £3,500 a yr, up from its present stage of £1,971 (for a family with typical consumption).

Consumer rights campaigners have warned that the transfer, with one other uplift taking it past £4,200 in January 2023, will pressure thousands and thousands of shoppers into gas poverty, which is when vitality prices account for greater than 10% of their disposable earnings.

At the beginning of August, Ofgem mentioned it was altering the methodology for the value cap to permit suppliers to recoup the complete prices of shopping for vitality for his or her clients at very excessive costs. It additionally introduced that it might transfer from reviewing the cap from twice to 4 occasions a yr.

An improve in vitality costs has been one of many most important contributors to the inflation spike skilled by the UK in recent months, exacerbating a cost-of-living disaster being endured by the nation’s households and prompting a pointy rise in rates of interest.

Earlier this week, it was reported that client costs rose to 10.1% within the yr to July. The Bank of England has warned that inflation might peak at 13% by the tip of 2022 and stay at elevated ranges for the entire of 2023.

It is anticipated to lift rates of interest when it makes its subsequent announcement on 15 September.

Ms Farnish advised The Times: “I resigned from the Ofgem board because I could not support a key decision to recover additional supplier costs from consumer bills this winter”.

Ms Farnish’s departure is an additional blow to the beleaguered regulator, which just lately got here below attack from MPs on the Business, Energy, Industry & Science committee who have been deeply essential of its efficiency in recent years.

They claimed the collapse of the UK’s vitality provider market, by which 30 firms have gone bust up to now 18 months and the place no clients tariffs now exist under the extent of the value cap, might have been mitigated by way of more durable regulation.

Ed Miliband, the Labour Party’s local weather change and internet zero spokesman, mentioned Ms Farnish’s resignation was “further proof that the government is asleep at the wheel when it comes to the energy bills crisis”.

15 August: Keir Starmer Says Urgent Action Is Required To Ease Worsening Crisis

The Labour Party has weighed into the argument about how one can ease the cost of residing disaster, saying it “wouldn’t let people pay a penny more on their fuel bill this winter.”

The present vitality value cap – standing at £1,971 a yr for these with typical utilization – is ready to rise to greater than £3,500 from 1 October. The precise determine can be introduced on 26 August by Ofgem, the market regulator that units the cap based mostly on wholesale vitality costs.

The cap is scheduled to vary once more from 1 January 2023, with analysts Cornwall Insights predicting a stage past £4,200 (see under).

In a heavily-trailed speech later at this time, Labour chief Sir Keir Starmer will say his plan to cease payments rising this winter “would save the typical family £1,000 now, get energy costs under control for the future and help tackle inflation.”

Labour says it might freeze the cap at its present stage, assembly the £29 billion cost partly by imposing further tax on oil and gasoline giants who, it says, are making ‘eye-watering’ income. The backdating to January of the windfall tax launched by Rishi Sunak when he was Chancellor in April would generate £8 billion, in line with Labour.

Critics say vitality firms akin to BP and Shell make the majority of their income from worldwide business, so it isn’t a simple matter to hit them with a windfall tax on the type of scale required.

The Labour plan would additionally enable for the scrapping of the proposed £400-per-household electrical energy invoice rebate devised by the Conservative authorities and scheduled to begin from October. This would contribute an additional £14 billion.

Some £7 billion could be raised by lowering curiosity payable on authorities debt due to diminished inflation.

Rishi Sunak – presently vying for management of the Conservative Party with Liz Truss – introduced a £9 billion vitality firm windfall tax, with the money earmarked to pay for the £400 discount in payments.

Both Mr Sunak and Ms Truss have mentioned that responding to the cost-of-living disaster normally and the escalating vitality costs specifically can be a precedence in the event that they win the management contest and change into prime minister on 5 September.

The Liberal Democrats below Ed Davey have already known as for the will increase within the cap to be scrapped.

Labour’s proposed emergency measures embrace a Warm Homes Plan designed to scale back vitality demand and decrease payments in the long run by insulating 19 million properties throughout the nation over the following decade.

It says freezing the value cap will convey inflation down by 4 share factors from its present 9.4%.

Sir Keir mentioned: “Britain’s cost of living crisis is getting worse, leaving people scared about how they’ll get through the winter. Labour’s plan to save households £1,000 this winter and invest in sustainable British energy to bring bills down in the long-term is a direct response to the national economic emergency that is leaving families fearing for the future.”

Another measure contained in at this time’s speech is a dedication to make sure that vitality clients with prepayment meters pay the identical as individuals who pay their payments month-to-month in arrears.

At current, prepay clients pay 2% – 3% extra (the present prepay cap is £2,017) with the distinction attributed to the upper prices of administering the prepay system, which Labour says isn’t justifiable.

9 August 2022: Analyst Blames Wholesale Costs And Revised Ofgem Methodology For Shock Cap Forecast

Analyst Cornwall Insight has raised its forecast for October’s value cap by £200, saying it is going to hit £3,582 a yr for a typical family with common consumption. That’s an 80% improve (£1,611) on at this time’s cap of £1,971.

Ofgem, the vitality market regulator, will verify the extent of the October cap on 26 August. But the knowledge of an enormous improve is prompting requires pressing authorities motion to assist households meet what’s going to, for a lot of, be unaffordable expenses.

The determine for January 2023, when the cap can be adjusted once more, makes even starker studying, coming in at £4,266. That’s £650 greater than Cornwall’s earlier estimate.

The steep improve is blamed partly on excessive wholesale costs for gasoline and electrical energy. Ofgem hikes the cap to allow vitality suppliers to cross on elevated market prices.

Bills can even go up sharply following a change to Ofgem’s cap-setting methodology to permit vitality firms to recoup extra prices related to guaranteeing future provides.

Cornwall says the cap will rise once more in April 2023 – to £4,423 – earlier than falling to round £3,800 within the second half of subsequent yr. That’s nonetheless considerably greater than this October’s determine.

Dr Craig Lowrey at Cornwall Insight mentioned: “These new forecasts for the January to March 2023 quarter additional underline the necessity for assist for households who will wrestle to pay their vitality payments this winter.

“An increase of over £650 in the January predictions comes as a shock. The cost-of-living crisis was already top of the news agenda as more and more people face fuel poverty, this will only compound the concerns.”

Dr Lowery mentioned the timing of the change to Ofgem’s methodology is unlucky however is critical to assist stop extra vitality firms going out of business, which might set off extra prices for shoppers. Around 30 vitality suppliers have gone bust for the reason that begin of 2021.

He argues that the existence of cap itself needs to be challenged: “Rather than critiquing the methodology of the cap, it might be time to think about the cap’s place altogether. After all, if it isn’t controlling client costs and is damaging suppliers’ business fashions, we should surprise whether it is match for objective – particularly in these occasions of unprecedented vitality market circumstances.

“Right now, the current price cap is not working for consumers, suppliers, or the economy.”

Cornwall has added its voice to these demanding authorities motion to assist beleaguered households: “It is essential that the government use our predictions to spur on a review of the support package being offered to consumers. If the £400 [to be deducted from all electricity bills in stages between October and March] was not enough to make a dent in the impact of our previous forecast, it most certainly is not enough now.”

Rishi Sunak MP, who’s vying with Liz Truss MP to be elected chief of the Conservative Party and thus the following Prime Minister from 5 September, is reported as saying he’ll improve the £400 cost if victorious.

Ms Truss has but to set out her coverage on the matter, though she has indicated that she would introduce tax cuts to assist with the cost of residing disaster.

Opposition MPs have known as for better taxation of vitality firm income to fund reduction measures for probably the most vulnerable. Some are additionally calling for VAT and inexperienced levies to be faraway from vitality payments.

Ed Davey, chief of the Liberal Democrats, says the federal government ought to scrap the October value cap improve altogether and fund the £40bn cost through windfall taxes and common taxation.

Another possibility put ahead by varied business figures and client curiosity teams could be the creation of a ‘social’ tariff focused at decrease earnings households and people utilizing excessive quantities of vitality to energy medical tools.

This could be priced considerably under the extent of the cap and paid for both by levies on different clients’ payments or, once more, from taxation income.

4 August 2022: Household Energy Costs Subject To More Frequent Change

The most vitality suppliers might be charged per unit of gasoline and electrical energy can be reviewed each three months, reasonably than each six months, it’s been confirmed.

Energy regulator Ofgem has at this time formally moved from reviewing its vitality value cap from twice a yr to 4 occasions a yr. It says that extra frequent updates will mirror actions in wholesale gasoline and electrical energy prices quicker and extra precisely.

The cap will now be reviewed each January, April, July and October.

Warning households of a ‘very challenging winter’ to come back, Ofgem mentioned the modifications would assist to stabilise the vitality market and scale back the danger of extra vitality suppliers collapsing – an final result it believes would push prices up additional.

The present value cap is ready at £1,971 per yr, based mostly on typical use. The subsequent value cap announcement can be made by Ofgem on 26 August and applied on 1 October.

Energy market analysts Cornwall Insight predict that the cap might hit £3,359 between October and December – and soar to £3,616 between January and March subsequent yr.

It’s thought that extra frequent opinions of the cap might reduce the ‘rocket and feather effect’ on vitality pricing, the place costs are fast to rise in step with wholesale costs, however gradual to fall when costs drop.

‘No easy answers’

Ofgem’s chief govt, Jonathan Brearley mentioned: “As a results of Russia’s actions, the volatility within the vitality markets we skilled final winter has lasted for much longer, with a lot greater costs than ever earlier than. And which means the cost of supplying electrical energy and gasoline to properties has elevated significantly.

“The trade-offs we need to make on behalf of consumers are extremely difficult and there are simply no easy answers right now. Today’s changes ensure the price cap does its job, making sure customers are only paying the real cost of their energy, but also, that it can adapt to the current volatile market.”

Responding to the information, Gillian Cooper, head of vitality coverage at Citizens Advice, mentioned: “Changing to a quarterly value cap ought to restrict the danger of any extra suppliers going bust, which is an efficient factor. But our payments are already extremely excessive and nonetheless rising.

“The authorities was proper to usher in monetary assist for individuals, nevertheless it will not be sufficient to maintain many households afloat. It should be able to act once more earlier than winter attracts in.

“Ofgem must make sure suppliers are helping customers who are struggling to pay. It should hold energy companies to account so people aren’t chased by debt collectors or pushed onto prepayment meters when they can’t keep up with bills.”

2 August: Average Energy Bills Will Exceed £3,000 A Year Until 2024

Average family vitality payments are predicted to stay at greater than £300 a month till no less than 2024, in line with new predictions.

Energy analysts Cornwall Insight says the default tariff cap will put payments at greater than £3,000 a yr for no less than the following 15 months, reaching as excessive as £3,649 by subsequent summer season.

The agency says continued volatility available in the market attributable to uncertainty over Russian gasoline provides will see the brand new vitality value cap hit £3,359 between October and December, and £3,616 between January and March 2023.

Cornwall Insight’s Dr Craig Lowrey mentioned: “While the federal government has pledged some assist for October’s vitality rise, our cap forecast has elevated by over £500 for the reason that funding was proposed, and the reality is the £400 pledged will solely scratch the floor of this downside.

“A review of delivering support for the next cap periods should be on the top of the to-do-list for any incoming Prime Minister. As our price cap breakdowns show, tinkering with VAT and policy costs will only make a dent in bills, when it is the high wholesale prices behind the increases.”

The new predictions come as oil big BP second-quarter income hit a 14-year excessive of £6.9 billion at this time.

Commenting on the outcomes, BP’s chief govt, Bernard Looney mentioned: “Our people have continued to work hard throughout the quarter helping to solve the energy trilemma – secure, affordable and lower carbon energy.”

29 July: Government Reveals Payment Details Of £400 Energy Bill Discount

Details of how households throughout Great Britain will obtain a £400 low cost on their vitality payments below the Energy Bills Support Scheme has been set out by the federal government.

For clients paying by direct debit, a reduction of £66 can be utilized mechanically to their payments in October and November. From December by way of to March 2023, this quantity will rise to £67.

The low cost can be utilized on a month-to-month foundation no matter whether or not clients pay their vitality payments month-to-month or quarterly, or have an related cost card. This is to make sure anybody transferring home throughout the interval will get the complete good thing about the £400 low cost.

Households on a prepayment meter can be issued vouchers from October within the first week of every month by textual content, e-mail or put up, utilizing the contact particulars which were registered with the vitality provider. However, these clients might want to motion the low cost at their typical top-up level – akin to a PayPoint or Post Office department.

The low cost applies to all households in Great Britain with a home electrical energy meter – together with college students and different tenants whose vitality payments are already factored into the cost of their lease. In these circumstances landlords should cross on the low cost appropriately, in step with guidelines set down by vitality regulator, Ofgem.

Only 1% of households won’t profit from the Energy Bills Support Scheme in line with the federal government – both as a result of they don’t have a home electrical energy meter or a direct relationship with an vitality provider, akin to park home residents.

It confirmed that these individuals will obtain equal monetary assist on their vitality payments – particulars of which can be introduced within the autumn.

Business and Energy Secretary, Kwasi Kwarteng mentioned: “While no government can control global gas prices, we have a responsibility to step in where we can and this significant £400 discount on energy bills we’re providing will go some way to help millions of families over the colder months.”

The authorities pressured that in all circumstances, no family needs to be requested for financial institution particulars at any level.

28 July : Sunak Pledges To Cut VAT As Forecasts Put New Cap At £3,500

Respected vitality market analysts Cornwall Insight are predicting that the vitality value cap, presently £1,971, will rise by almost 80% in October to round £3,500 a yr for a typical family. The new stage can be introduced on 26 August.

Wholesale costs – which decide the extent of the cap – have elevated dramatically in recent days because of the discount in provide from Russia to the European Union.

There are fears the cap might rise in the direction of £4,000 in January 2023, stretching family budgets properly past breaking level for thousands and thousands. Commentators are calling for elevated intervention by the federal government to assist bill-payers meet the mounting prices.

MPs are urging the regulator, Ofgem, to develop a so-called social tariff to make vitality reasonably priced for these on the bottom incomes.

Rishi Sunak has pledged to scrap the 5% cost of VAT on family vitality payments as a part of his marketing campaign to change into the brand new Conservative Party chief and Prime Minister on 5 September.

The former Chancellor mentioned that if the brand new value cap on vitality payments – resulting from be introduced by regulator Ofgem on 26 August and applied on 1 October this yr – exceeds £3,000, he’ll scrap VAT on vitality for the following 12 months, saving the common family round £160.

Mr Sunak has beforehand opposed requires VAT to be faraway from vitality payments, however his supporters deny he’s performing a u-turn given the change could be non permanent.

The latest estimates from vitality analysts, Cornwall Insights, forecast the brand new cap will stand at £3,244, up from the present determine of £1,971.

The vitality value cap refers back to the most quantity that vitality suppliers are permitted to cost per kWh of gasoline and electrical energy (or the ‘unit rate’) annually – and likewise incorporates a most every day ‘standing charge’ which is the cost of getting the ability to your home.

The proposed VAT reduce could be along with the £400 windfall cost in the direction of electrical energy payments that Rishi Sunak, as Chancellor, introduced in May below the Energy Bills Support Scheme.

The £400 can be mechanically added to the steadiness of each family’s electrical energy vitality account over the six months ranging from October. If you might be on a prepayment meter, £400 will both be added to your meter steadiness or paid in vouchers.

A package deal of different measures geared toward these on means-tested advantages has additionally been introduced (see tales under).

Rishi Sunak’s VAT pledge – the primary tax reduce he has unveiled in his marketing campaign to change into Conservative social gathering chief – could be a part of his ‘Winter Plan’ which he says will handle inflation and the overall cost of residing.

Ofgem below attack

Earlier this week, MPs on the Business, Energy, Industry & Science committee have been deeply essential of Ofgem’s efficiency in recent years, saying the collapse of the vitality provider market (30 firms have gone bust up to now 18 months and there aren’t any tariffs available under the extent of the value cap) might have been mitigated by way of extra strong regulation.

The MPs mentioned: “Ofgem has proved incompetent because the regulatory authority of the vitality retail market during the last decade. It allowed suppliers to enter the market with out making certain that they had access to ample capital, acceptable business plans, and have been run by people with related experience.

“The regulator enabled poorly capitalised suppliers to be overly reliant on buyer credit score balances and function with insufficient hedging, leaving the market ill-equipped to soak up wholesale value will increase. The guidelines that have been in place weren’t enforced and Ofgem didn’t perceive the business fashions of the suppliers it’s mandated to oversee.

“The Government prioritised competition over effective market regulation and overlooked Ofgem’s lack of supervision of this essential market.”

Ofgem responded by saying it’s working to reform your entire market.

Looking forward to the influence of the upper value cap, the MPs urged the introduction of a ‘social tariff’, intentionally priced at lower than cost, to assist these most in want.

They mentioned: “The Government ought to contemplate the introduction of a social tariff for probably the most vulnerable clients and a relative tariff for the remainder of the market.

“The influence of the vitality value disaster on households is ongoing and extreme, significantly within the context of the cost-of-living disaster, and is more likely to trigger an unacceptable rise in gas poverty and hardship this winter. While we welcome the Government’s May 2022 assist package deal, it’s not ample to reply to anticipated value will increase come October.

“The Government must immediately update its support, targeting this at customers who are on low incomes, fuel poor, and in vulnerable circumstances, and develop a scheme to support vulnerable customers to accelerate the repayment of energy debt resulting from this crisis.”

13 July: Regulator Cracks Whip On Operational Standards

Energy market regulator, Ofgem, has launched its evaluation of how suppliers adjusted buyer direct debit funds earlier this yr. Many households noticed steep will increase, with 500,000 funds growing by greater than 100%, writes Candiece Cyrus.

The overview discovered that:

over 7 million vitality shoppers (out of an estimated 11 million) on Standard Variable Tariffs (SVT) noticed a direct debit improve between February and April 2022
common improve was 62%, reflecting the elevated cost of gasoline
round 500,000 households noticed a rise of greater than 100%. All clients whose direct debit was elevated by 100% or extra between 1 February and 30 April 2022 can be assessed by their provider to find out whether or not the uplift was applicable
no proof was proof of unjustifiably excessive direct debits
some suppliers’ processes usually are not as strong as they might be, and that this might result in inconsistent, incorrect or poor therapy for purchasers
there’s a lack of formally documented insurance policies and processes inside some suppliers, which dangers inconsistent and poor client outcomes.

Of 17 massive suppliers available in the market, 4 – Ecotricity, Good Energy, Green Energy UK, Utilita Energy – had average to extreme weaknesses of their processes and controls.

Ofgem is partaking with these corporations to drive “rapid and robust improvements” to processes and a reassessment of buyer direct debits the place essential. If these suppliers don’t enhance rapidly sufficient, Ofgem says it is going to contemplate enforcement motion.

Two corporations, TruEnergy and UK Energy Incubator Hub (UKEIH), have been discovered to have extreme weaknesses. UKEIH has since ceased to commerce, with its clients taken on by Octopus on 9 July. Enforcement motion in opposition to TruEnergy is being thought-about.

Bulb, E.ON, Octopus Energy, Outfox the Market, Ovo, Shell and Utility Warehouse have been discovered to have some weaknesses or gaps of their processes that would result in poor client outcomes. Ofgem has began compliance engagement with these suppliers

No vital points have been discovered at British Gas, EDF, ScottishPower and SO Energy, though Ofgem says it is going to work with these suppliers for steady enchancment. The corporations can be requested to overview buyer direct debits to make sure they’re right, as an extra assurance for shoppers.

The firms concerned should lay out their plans for rectifying any points inside two weeks, for Ofgem to approve.

Ofgem can pressure firms to take motion to enhance operations, wonderful firms and ban them from taking over new clients if sufficient enchancment has not been made.

Where applicable, Ofgem expects suppliers to regulate any miscalculations, together with making repayments if wanted, and contemplate whether or not a goodwill cost is warranted.

8 July: Analyst Says Cap Will Smash £3k Barrier In October And Soar Further In January

Households are going through but extra monetary strain following analyst Cornwall Insight’s amended prediction that the Ofgem vitality value cap will rise to £3,244 in October, up from its present £1,971 and considerably greater that the £2,980 it mooted final month.

The agency says the cap, which limits how a lot vitality corporations can cost for models of vitality and standing expenses, will rise additional to £3,363 in January 2023. It beforehand forecast the cap to be £3,003 at that time.

The cap is reviewed each six months, and rose to its current stage from £1,277 in April. After October’s improve, will probably be reviewed each three months to permit better responsiveness to actions in wholesale vitality costs.

The figures used are for the annual cost of vitality for a typical family on a regular variable charge tariff paying by direct debit. The cap doesn’t impose a restrict on the scale of payments, with prices decided by utilization.

If Cornwall Insight’s estimates show correct, payments can have elevated by over 160% within the months between March 2022 and January 2023 on account of rising wholesale prices (see tales under).

The authorities has introduced a package deal of measures to assist individuals battle in opposition to the cost of residing disaster, together with money funds to these on means-tested advantages and £400 off electrical energy payments for each family within the autumn.

It stays to be seen how recent political turmoil, together with the resignation of Boris Johnson as chief of the Conservative Party and the following management election, will have an effect on future plans to deal with excessive ranges of inflation throughout all sectors of the financial system.

7 July: Energy Security Bill Extends Price Cap, Pledges Action On Green Initiatives

The authorities has included measures for tackling rising vitality prices, persevering with the rollout of vitality sensible meters and bettering safety in opposition to cyber threats on sensible home equipment, in its Energy Security Bill, which was launched into parliament yesterday.

The ambition is to generate £100 billion of personal sector funding into the vitality sector by 2030, with hydrogen, offshore wind and warmth pumps being promoted as new sources of vitality provide.

Given the federal government upheaval following mass resignations within the run-up to Boris Johnson’s resignation as chief of the Conservative social gathering, the Bill could also be delayed in its passing by way of Parliament.

The Bill makes provision for the vitality value cap to be retained past its authentic end-date of 2023, the purpose being to keep up comparatively low vitality prices for 11 million households on default/normal variable tariffs and 4 million on prepayment meters.

The cap limits how a lot vitality suppliers can cost households per unit of gasoline and electrical energy, together with a standing cost, whereas reflecting fluctuations in wholesale vitality costs.

The final change to the cap was in April, when it soared by 54% to £1,971 a yr for households with common vitality consumption. For households on prepayment meter tariffs, it rose to £2,017 a yr. The improve was the results of greater wholesale costs resulting from growing worldwide demand and strain on provides due to the warfare in Ukraine.

Energy analytics agency Cornwall Insight forecasts the cap will hit £3,244 in October and £3,363 in January subsequent yr.

Dame Clare Moriarty of client recommendation charity Citizens Advice, helps the value cap extension however mentioned extra quick time period measures are wanted to assist households with vitality prices: “With thousands and thousands of individuals already struggling to make ends meet, it’s a reduction to see the federal government prolong the value cap past 2023.

“Yet a lot of what we’re paying for our vitality goes straight out the window, as a result of so a lot of our properties are draughty and poorly insulated.

“We’re glad the government is taking a longer-term view on supporting people with energy bills, but it must bring in energy efficiency measures as a matter of urgency, to help families stay warm this winter.”

The new Bill additionally incorporates measures to proceed the rollout of sensible meters to households and small businesses throughout Britain by the tip of 2025. It goals to overview suppliers’ set up targets for the final two years of the rollout in 2023, and overview the entire sensible metering system after 2025.

Smart meters show how a lot vitality is getting used, together with the cost, in real-time, permitting shoppers to see the place they’ll scale back their vitality utilization and save money.

Smart meters would additionally assist clients to see the vitality they could be saving on time-of-use tariffs, which can be launched into the UK within the coming months. These tariffs encourage households to make use of off-peak vitality provides – for example, to recharge an electrical automobile battery – to profit from decrease costs, and to unfold demand across the clock.

The Bill can even assist stop ‘cyber hacking’ of sensible home equipment akin to electrical car cost factors and sensible warmth pumps by giving the federal government extra powers to introduce minimal technical necessities for safety and information privateness.

The authorities can even have the ability to manage firms who remotely function these home equipment.

Kwasi Kwarteng, business and vitality secretary, mentioned: “To guarantee we’re not held hostage by rogue states and unstable markets, we should speed up plans to build a really clear, reasonably priced, home-grown vitality system in Britain.

“This is the biggest reform of our energy system in a decade. We’re going to slash red tape, get investment into the UK, and grab as much global market share as possible in new technologies to make this plan a reality.”

Dhara Vyas at commerce affiliation Energy UK mentioned: “With the cost of energy reaching unprecedented levels it’s right that the government urgently legislates to protect consumers, while also delivering frameworks and regulation to support the decarbonisation of the UK economy so that it reduces bills in the long term.”

23 June: Audit Office Slams Lax Ofgem Regulation For Enabling Weak Companies To Operate

Energy clients pays an estimated £2.7 billion to cowl the cost of transferring 2.4 million clients to new suppliers following the closure of 28 vitality corporations since June 2021, in line with the National Audit Office (NAO), the unbiased Parliamentary physique that scrutinises public spending.

NAO was essential of the function performed in regulating the vitality market by Ofgem, which is accountable for managing the fall-out when a provider goes to the wall.

The estimated cost of £94 per family, can be unfold throughout all vitality clients, not solely these whose corporations failed.

According to NAO, Ofgem’s method to licensing and monitoring suppliers over earlier years elevated the danger of corporations failing, though NAO mentioned appreciable hikes in wholesale vitality costs have been the principle trigger.

Gareth Davies, head of NAO mentioned: “Ofgem and the Department for Business, Energy & Industrial Strategy (BEIS) ensured that the overwhelming majority of shoppers confronted no disruption to their vitality provide when their supplier failed.

“However, by permitting so many suppliers with weak funds to enter the market, and by failing to think about that there might be a protracted interval of volatility in vitality costs, Ofgem allowed a market to develop that was vulnerable to large-scale shocks.

“Consumers have borne the brunt of supplier failures at a time when many households are already under significant financial strain having seen their bills go up to record levels. A supplier market must be developed that truly works for consumers.”

NOA mentioned that, within the years to 2018, Ofgem didn’t scrutinise the monetary position of vitality corporations once they utilized for a licence or after they entered the market. While it started tightening guidelines in 2018, NOA mentioned Ofgem didn’t handle dangers with current suppliers till 2021.

NAO mentioned Ofgem ought to “define a set of objectives for its regulation of the retail market around price, stability, and innovation, against which it should review and report its performance at least annually”.

An Ofgem spokesperson mentioned: “Ofgem accepts the findings of the NAO report, which aligns with our personal conclusions and the suggestions from the unbiased Oxera report we commissioned, and we’re already working exhausting to handle all the points raised.

“While the once-in-a-generation international vitality value shock would have resulted in market exits below any regulatory framework, we’ve already been clear that suppliers and Ofgem’s monetary resilience regime weren’t strong sufficient. This contributed to a big variety of failures since August 2021.

“We welcome the NAO’s recognition that Ofgem started tightening the principles in 2018 and has continued to take action by way of to 2022. Our announcement this week continues this course of with safety of buyer credit score balances and hard new measures to enhance the monetary well being of vitality suppliers (see story under).

“While no regulator can, or should, guarantee companies will not fail in the future, we will continue to take a whole-market approach to further strengthen the regulatory regime, ensuring a fair and robust market for consumers which keeps costs fair as we move away from fossils fuels and towards affordable, green, home-grown energy.”

NOA says the estimated £94 cost per family to cowl the administration of the client reallocation course of might rise or fall because the cost of corporations exiting the market is unsure.

An extra cost to run vitality agency Bulb Energy may be added. As a bigger provider with 1.6 million clients, Bulb Energy was put into particular administration final yr. The authorities has spent £0.9 billion on an administrator to run the corporate in 2021-2022 and budgeted one other £1 billion to run it throughout 2022-23.

20 June: Regulator Stops Firms Using Customer Funds As ‘Interest-Free Credit Card’

Ofgem, the vitality market regulator, is introducing monetary controls to scale back the probability of suppliers going bust. And if there are company failures sooner or later, it desires to guard shoppers from the cost of dealing with the executive fall-out.

Since September 2021, 28 vitality suppliers collapsed, leaving all households to share the tab for reallocating their clients to new suppliers and defending any credit score balances that they had with the defunct provider.

This added £94 to each households’ annual vitality prices.

Ofgem is proposing:

enhancements to the monetary well being to scale back the danger of failures
motion to stop the prices of defending credit score balances and necessary inexperienced levies falling to shoppers if an organization fails
tighter guidelines on the extent of direct debits suppliers can cost clients, to make sure credit score balances don’t change into extreme.

Jonathan Brearley, CEO of Ofgem, mentioned: “The vitality market stays extremely unstable and there are a variety of big geopolitical points persevering with to use huge strain. Ofgem is working to make sure suppliers shore up their positions to allow them to climate the continuing storm.

“By making certain that suppliers are working well-financed, sustainable and extra resilient business fashions, we will keep away from the provider failures we noticed final yr which brought on big stress and fear and added prices to everybody’s payments.

“But if some do still fail, consumer credit balances and green levy/renewables payments will be protected.”

Consumer teams have lengthy criticised the system that enables firms to dip into their clients’ account credit to bankroll their operations – Mr Brearley conceded that such balances “are used by some suppliers like an interest free company credit card.”

The thought of the reform is that suppliers can be obliged to have sufficient working capital to function with out placing their clients’ credit score balances in danger. Ofgem has been criticised up to now for permitting dozens of firms to enter the market within the final 10 years with out sufficient scrutiny of their monetary power.

Ofgem says it desires to build longer-term resilience by encouraging sustainable business fashions and stopping dangerous behaviour. It has developed stricter entry necessities for brand spanking new suppliers and launched new exams to make sure individuals who begin and run vitality firms are match and correct to take action.

15 June: £326 Payment In Accounts Next Month, £324 In Autumn

The authorities has introduced that the primary of two cost-of-living money assist funds totalling £650 can be made out of 14 July onwards to eight million UK households in receipt of means-tested advantages.

The first cost of £326 can be made direct to recipients’ financial institution accounts by the tip of July.

To be eligible for the primary instalment, claimants wanted to be in receipt of one of many following advantages, or have begun a declare which is later profitable, as of 25 May 2022:

Universal Credit
Income-based Jobseekers Allowance
Income-related Employment and Support Allowance
Income Support
Working Tax Credit
Child Tax Credit
Pension Credit.

This cost can be tax-free, won’t rely in the direction of the profit cap, and won’t have any influence on current profit awards. The second instalment of £324 will observe within the autumn at a date to be determined, with particulars of eligibility supplied sooner or later.

The £650 cost to low-income households was introduced in May by the Chancellor, Rishi Sunak MP, alongside a package deal of different monetary assist measure. See story under.

26 May: Chancellor Unveils £15bn Package To Counter Energy Bill Hike

UPDATE 27 MAY: Ofgem, the vitality regulator, is warning individuals to not fall for scams the place criminals say it’s essential to register for the funds or the invoice low cost listed under, earlier than inviting recipients to supply financial institution particulars or click on by way of to faux web sites. Ofgem has issued no such notices or requests, so any such e-mail, textual content or different communication needs to be ignored and reported to Action Fraud in England, Wales and Northern Ireland or to Police Scotland.

Rishi Sunak MP, Chancellor of the Exchequer, has introduced a £15 billion package deal of measures designed to assist households afford the anticipated steep improve in vitality payments later this yr.

All households will see £400 mechanically reduce from their payments within the autumn, without having to repay, whereas these on means-tested advantages, pensioners and people on incapacity advantages will obtain lump sum money funds direct to their financial institution accounts. There can be no want to use.

The vitality payments value cap, managed by the market regulator, Ofgem, is anticipated to rise to round £2,800 a yr for typical households on 1 October, up from £1,971. The present determine for households with a prepayment meter is £2,017 a yr.

Ofgem’s chief, Jonathan Brearley, confirmed the £2,800 determine earlier this week (see story under).

The Chancellor additionally introduced an vitality income levy on oil and gasoline manufacturing firms, which have loved hovering income resulting from excessive wholesale costs – that is anticipated to lift £5 billion.

The authorities can be exploring whether or not such a ‘windfall’ tax might be prolonged to the electrical energy era sector.

The measures introduced at this time embrace:

£650 money cost (in two instalments in July and the autumn) to eight million households on means-tested advantages
£300 money cost to pensioner households through a rise within the Winter Fuel Payment
£150 money cost to these in receipt of incapacity advantages, a few of whom may qualify for the £650 cost.

Additionally, Mr Sunak mentioned that the £200 vitality invoice grant revealed in February and resulting from be deducted from all family electrical energy payments in October can be doubled to £400.

Crucially, he mentioned it won’t should be repaid. Originally, the plan was for £40 a yr to be deducted from payments for 5 years to recoup the unique £200 grant.

Benefits calculation

As a part of his cost-of-living handle to Parliament, the Chancellor introduced that advantages payable within the UK from April 2023, together with the state pension, will rise in step with client costs as measured in September.

This reinstates the ‘triple lock’, which sees will increase every tax yr by the very best of three measures: client value inflation, common wage development, or 2.5%.

The authorities opted to droop the triple lock for the 2022/23 tax yr in response to the pandemic, however the Chancellor has introduced will probably be reinstated this September for 2023 will increase.

The most recent CPI determine from April this yr, as calculated by the Office for National Statistics, is 9%.

The Bank of England and different monetary commentators have warned that inflation might proceed to stay stubbornly excessive for the rest of 2022 and probably past.

If that’s the case, then the brand new profit calculation will present a big increase to the state pension price a number of hundred kilos a yr for the 2023/24 tax yr. The full UK state pension presently stands at £185.15.

Energy Profits Levy

In at this time’s speech, the Chancellor introduced a Temporary Energy Profits Levy as a part of the federal government’s cost of residing assist package deal.

Oil and gasoline firms will face an extra 25% tax on income, taking their efficient charge from 40% to 65%. This is a short lived measure that can be phased out when oil and gasoline costs “return to historically more normal levels”.

Mr Sunak talked about {that a} ‘sunset clause’ can be written into the laws, with the expectation that the non permanent uplift in tax charges will stop on the finish of 2025.

He additionally introduced a brand new Investment Allowance to melt the blow for oil and gasoline firms. Companies will now obtain 90% in tax reduction for each £1 invested, almost double the earlier stage. Mr Sunak acknowledged that “companies will have a new and significant incentive to reinvest their profits.”

Mr Sunak made reference to the “extraordinary” income additionally being made within the electrical energy era sector and identified that France, Italy, Spain and Greece have already taken measures to right this.

The authorities is exploring whether or not generator firms must also face a income levy.

Mr Sunak estimated that the Energy Profits Levy on oil and gasoline producers will elevate £5 billion over the following yr to assist fund the £15 billion of assist measures introduced at this time.

24 May: October Energy Price Cap Could Rise To £2,800, Says Ofgem Boss

Average family vitality payments might bounce by greater than £800 a yr this autumn when the brand new vitality value cap takes impact.

Jonathan Brearley, chief govt of vitality regulator Ofgem, advised MPs on the cross-party Business, Energy and Industrial Strategy Parliamentary committee that he anticipated the vitality value cap to rise to “around £2,800” when it’s recalculated later this summer season.

The present cap, applied in April, stands at £1,971.

Such a transfer would worsen the UK’s present cost-of-living disaster already being felt by thousands and thousands of households.

Brearley attributed the rise to continued volatility within the gasoline market. This has been exacerbated by the Russian invasion of Ukraine, its influence on provides and the following knock-on for the value of gas.

Volatile vitality costs have already brought on 30 UK vitality firms to go bust for the reason that starting of 2021. Collapses akin to these may also drive client costs greater due to the cost of reallocating clients of failed corporations to different suppliers.

The value cap, which limits how a lot vitality corporations can cost for every unit of gasoline and electrical energy equipped to home clients, together with any standing cost, rose by 54% on 1 April this yr.

The improve this spring meant that the invoice for a family with common consumption, on a dual-fuel normal variable charge tariff and paying by direct debit, rose from the earlier value cap stage of £1,277 to only below £1,971.

Pre-payment meter clients additionally skilled a hike in costs – from £1,309 to £2,017 – additionally based mostly on typical utilization.

The cap, which is calculated twice-yearly for the time being, though Ofgem is pushing for it to be reviewed quarterly from the autumn (see tales under), applies to round 22 million households in England, Scotland and Wales. Northern Ireland doesn’t have a value cap.

Brearley advised MPs that vitality value rises have been a “once in a generation event not seen since the oil crisis in the 1970s”.

He additionally warned that the variety of individuals in gas poverty – outlined as being when a family must spend greater than 10% of its disposable earnings on heating its home – might double.

Using the present system of calculation, the value cap can be recalculated this August earlier than being applied on 1 October. Brearley estimated that, by the autumn, 12 million households might be placed in gas poverty.

Brearley advised MPs: “We are really managing between two versions of events. One where the price falls back down to where it was before, for example if there’s peace in Ukraine, but one where prices could go even further if we were to see, for example, a disruptive interruption of gas from Russia.”

The Ofgem boss additionally apologised for regulatory shortcomings and admitted that had monetary controls been in place sooner for suppliers, fewer corporations would have gone bust up to now yr resulting from being unprepared for the sharp rise in wholesale vitality costs.

The estimated bounce within the value cap is more likely to renew calls on the federal government to take additional motion to move off the influence on households going through hovering vitality prices. One answer being urged by opposition events and campaigners is a windfall tax on vitality firms which have loved bumper income within the first a part of this yr.

18 May: Analyst Predicts 5% Bills Reduction Under Quarterly Cap

Energy analysis specialist Cornwall Insight at this time supplied evaluation of the probably impact on vitality payments of transferring to a quarterly value cap overview, in comparison with the present value cap overview each six months (see story under).

Dr Craig Lowrey, principal marketing consultant at Cornwall Insight, mentioned: “The devil will be in the detail. With greater complexity comes greater risk of unintended consequences. It would have been useful to see more detailed evaluation of price cap levels for the new world against the old from a consumer perspective.”

Cornwall Insight is forecasting that typical annual vitality payments would rise to £2,750 this winter below the present value cap system. Under a quarterly overview of the value cap, it predicts that payments would rise to £2,600.

While this stays a big improve from the present value cap stage of £1,971 a yr for a family with common consumption, it might imply a 5% discount in comparison with the six-monthly overview interval.

Ofgem, the vitality market regulator, is endeavor a proper session of its proposed transfer to a three-monthly overview of the value cap. It favours the transfer as a result of, it says, it might shield vitality suppliers who would be capable of transfer their vitality costs in step with modifications in wholesale charges.

Any modifications would come into impact from October 2022 when the present value cap is because of change (the brand new stage can be introduced in August).

16 May: Ofgem Seeks Quarterly Cap Review Cycle

The UK’s vitality regulator, Ofgem, is looking for reforms that might see its vitality value cap adjusted each quarter reasonably than twice a yr.

The cap was launched in 2019 to guard shoppers from unfair pricing, by limiting what vitality suppliers can cost. It is presently up to date in step with wholesale vitality prices each April and October.

Under the proposed reforms, the cap could be up to date each three months in January, April, July and October.

The cap, which limits the quantity shoppers might be charged for every unit of vitality used and for related standing expenses for gasoline and electrical energy, doesn’t put a ceiling on payments. The extra vitality used, the upper the invoice can be.

At current, the cap is £1,971 for a median family with a twin gas (gasoline and electrical energy) variable charge tariff, paying yearly by direct debit. There are fears this might rise to £2,600 and even £3,000 in October.

Last week, the federal government introduced within the Queen’s Speech that the cap, launched as a short lived measure in 2019, can be prolonged past 2023 in recognition of market circumstances (see story under).

Fair value

Jonathan Brearley, Ofgem CEO, mentioned altering to quarterly cap opinions might reduce payments: “Our reforms will guarantee shoppers are paying a good value for his or her vitality whereas making certain resilience throughout the sector.

“Today’s proposed change would mean the price cap is more reflective of current market prices, and any price falls would be delivered more quickly to consumers.”

Ofgem believes adjusting the value cap each quarter will assist vitality suppliers stay worthwhile as wholesale costs quickly rise and fall, lowering the probability of company failures.

Volatile costs have brought on round 30 UK vitality firms to go bust for the reason that starting of 2021. Collapses akin to these can drive client costs greater due to the cost of reallocating clients of failed corporations to different suppliers.

Mr Brearley added: “The last year has shown that we need to make changes to the price cap so that suppliers are better able to manage risks in these unprecedented market conditions.”

In the midst of a cost-of-living disaster, falling vitality payments might ease the pressure on UK family budgets. However, if the cost of wholesale vitality continued to soar, the invoice could be handed onto shoppers rather more rapidly if there have been a quarterly cap change in place.

Ofgem will provoke a session on the value cap plans at this time, which is able to stay open till Tuesday 14 June 2022. If these reforms come into impact, they are going to be put in place from October 2022.

10 May: Energy Security Bill Extends Ofgem Price Cap Beyond 2023

The Queen’s Speech, delivered by Prince Charles at this time to stipulate the federal government’s legislative programme for the following session of Parliament, included particulars of an Energy Securities Bill. This is geared toward defending shoppers from steep value hikes through an extension to the official vitality value cap regime past 2023.

The Bill can even renew nationwide emphasis on the change to renewable vitality sources and encourage households to put in warmth pumps as an alternative choice to conventional heating strategies which might be depending on fossil fuels.

However, critics have urged that the federal government needs to be taking extra pressing motion to alleviate the cost of residing disaster normally and hovering vitality payments specifically. The authorities has countered by stating that there aren’t any short-term fixes available.

There are fears that the following iteration of the value cap, which can be introduced by the regulator Ofgem in August and applied in October, might attain £3,000 a yr from its present stage of £1,971 for typical households (see tales under).

The value cap was a short lived measure launched in 2019 to stop vitality suppliers from making big income. The turmoil available in the market since wholesale costs escalated at first of 2021 has necessitated its being prolonged to guard clients from struggling the complete extent of prices, therefore the announcement at this time.

Currently, the cap modifications twice a yr in April and October, however Ofgem is proposing to regulate it extra often if market circumstances dictate.

9 May: Govt Plans To Extend Warm Home Discount In Scotland As Power Chief Demands Drastic Action

The UK authorities is proposing to increase its Warm Home Discount scheme in Scotland, with round 50,000 further households being added to the 230,000 that already obtain funds.

The £140 cost in the direction of winter electrical energy payments would additionally improve to £150, with extra suppliers inspired to take part. The scheme would even be prolonged to 2025 to 2026.

The purpose is to convey the Scottish scheme into line with the comparable schemes in England and Wales.

The authorities mentioned: “The Warm Home Discount in Scotland will proceed to focus assist on these in receipt of means-tested advantages akin to Universal Credit and Pension Credits, which ensures that deductions go to these on the bottom incomes.

“Energy suppliers can use additional eligibility criteria, as long as the criteria identify households at risk of fuel poverty, subject to approval from (energy regulator) Ofgem.”

You can discover out extra right here concerning the Warm Home Discount scheme, together with eligibility standards.

Shock proposal

In an interview with the BBC, Keith Anderson, head of Scottish Power, has repeated his requires vulnerable households to obtain a discount of £1,000 of their vitality payments within the autumn, with the cost being met by a £40 improve within the annual payments of different vitality clients for 5 years, beginning in 2023.

Mr Anderson first made the proposal when questioned in Parliament final month (see story under). He believes as much as 10 million households are liable to gas poverty when the following adjustment to the Ofgem value cap is made in October.

He is anxious that the cap can be set too low as a result of Ofgem will use present low gasoline costs in its calculations, whereas many suppliers have already paid recent excessive costs for future provides.

If the cap prevents suppliers from recouping what they’ve already spent, Mr Anderson mentioned we might see additional company failures on prime of the 30 we’ve seen up to now 18 months.

This would feed vital extra prices into the system which might in the end need to be added to buyer payments.

Pundits are suggesting that the October value cap determine might land someplace between £2,500-£3,000 for typical customers, up considerably from its present stage of £1,971.

3 May: Govt Backs Regulator Over Excessive Direct Debit Increases

Kwasi Kwarteng MP, business and vitality secretary, has at this time confirmed that the vitality market regulator, Ofgem, is scrutinising the behaviour of suppliers with regard to extreme will increase in buyer direct debits, with substantial fines probably if corporations proceed to transgress.

In a tweet this afternoon, Mr Kwarteng put his voice behind what many shoppers have been saying in recent weeks – that suppliers have demanded common funds at a stage far in extra of what is likely to be justified by the rise in Ofgem’s value cap on 1 April.

The cap elevated by 54%, including almost £700 to typical annual vitality payments for these paying by direct debit for a twin gas variable charge tariff. The present common value of £1,971 is anticipated to rise even additional in October, when the following cap overview is applied, resulting from excessive wholesale costs.

Mr Kwarteng tweeted: “Some vitality suppliers have been growing Direct Debits past what’s required.

“I can verify Ofgem has at this time issued Compliance Reviews. Suppliers have three weeks to reply.

“The regulator will not hesitate to swiftly enforce compliance, including issuing substantial fines.”

Ofgem first raised the difficulty of provider unhealthy observe in April when its boss, Jonathan Brearley, mentioned: “We are seeing troubling indicators that some firms are reacting to those (market pricing) modifications by permitting ranges of customer support to deteriorate.

“Concerns have been raised that some suppliers might have been growing direct debit funds by greater than is critical, or directing clients to tariffs that will not be of their finest curiosity.

“When households are facing massive increases in their energy bills, it is particularly important that suppliers are held to account and bad practices are addressed quickly.”

The compliance opinions will embrace stricter supervision of how direct debits are dealt with and the way a lot corporations are holding in buyer credit score balances.

Mr Brearley mentioned: “This work will allow Ofgem to determine if companies are fulfilling their licence conditions and to work with them to rectify deficiencies. Where they fail to do so, we will not hesitate to take swift action to enforce compliance, including issuing substantial fines.”

Ofgem can be cracking down on the observe whereby firms use buyer money to prop up their business reasonably than purchase vitality. It says this is among the root causes of the failures of a lot of these suppliers who exited the market.

Mr Brearley mentioned: “Customer credit balances should only be used to reconcile bills, not as a source of risk-free capital. That is why we are considering options to ring-fence credit balances and renewables payments in such a way that they would be protected if a supplier fails.”

Around 30 firms have gone bust for the reason that begin of 2021.

Energy Chiefs Demand ‘Massive Shift’ In Govt Policy

CEOs of a number of the UK’s largest vitality firms are calling on the federal government to supply pressing and concrete monetary assist to struggling clients going through big will increase of their payments.

Speaking at a gathering of the Business, Energy & Industry Strategy Parliamentary Select Committee at this time, Keith Anderson, head of Scottish Power, advised MPs that the present affordability disaster “is of a size and scale beyond what the industry can deal with.”

Energy costs leapt by 54% on 1 April when the market value cap, set by the regulator, Ofgem, was elevated to take account of upper wholesale prices in recent months. Average annual payments now stand at round £2,000.

The cap is anticipated to extend additional on 1 October because of the influence of the warfare in Ukraine on vitality provides. Mr Anderson mentioned the impact of the October cap change can be “horrific”.

One proposal for presidency intervention is the creation of a ‘deficit fund’, which might see £1,000 faraway from the annual payments of shoppers deemed to be in gas poverty or on a prepayment meter. This fund would then be repaid over 10 years by your entire vitality buyer base.

Mr Anderson mentioned this short-term measure ought to result in the creation of a reduced social tariff, once more geared toward these in gas poverty and people on a prepayment deal.

Michael Lewis, head of Eon, mentioned the federal government might additionally take away VAT from vitality payments (it’s charged at 5%) and switch environmental levies from payments into the overall taxation burden. Taken collectively, these measures might scale back annual common payments by £250 – £300.

Further measures might embrace extending the Warm Home Discount, price £150 a yr subsequent winter, to a bigger variety of individuals, and growing the £200 vitality rebate that can be paid by the federal government to all UK home electrical energy accounts within the autumn.

Mr Lewis additionally known as for the roll-out of vitality sensible meters to be made necessary to assist enhance effectivity throughout the market.

Chris O’Shea, head of British Gas proprietor Centrica, mentioned the regulation of the business needs to be overhauled to stop future company failures. Around 30 vitality corporations have collapsed up to now 12 months, with the resultant administration prices including £68 to the standing expenses paid by each vitality buyer.

Mr O’Shea advised the cross-party committee of MPs that he fears extra business failures subsequent winter, with the grim chance that they might dwarf what has gone earlier than.

The assembled vitality bosses expressed assist for the announcement final week by the regulator, Ofgem, that it’ll pursue tighter controls to stop firms from utilizing buyer funds to prop up their businesses.

They additionally backed strikes to cease vitality firms growing buyer direct debits by disproportionate quantities, and to bar them from transferring clients to fastened charge tariffs costing greater than normal variable charge tariffs.

Ofgem has threatened to levy substantial fines on firms that don’t adjust to its guidelines.

19 April: MPs To Grill Energy Chiefs Today

The cross-party Business, Energy & Industrial Strategy Committee will at this time quiz representatives of 4 main vitality corporations on the assist they’re offering clients within the wake of a 54% hike in common payments on 1 April.

CEOs from Centrica (proprietor of British Gas), E.ON, EDF and ScottishPower will face MPs at 10:30 this morning.

MPs are anticipated to deal with the difficulty of suppliers reportedly growing direct debits past a stage in line with the brand new vitality value cap of £1,971 a yr for typical consumption.

There have additionally been stories of shoppers being pressured onto costly fastened charge offers as a substitute of variable tariffs, that are cap-controlled.

MPs can even query the bosses on how they’ll assist implement the federal government’s Energy Security Strategy (see story under). Other matters on the agenda embrace the supply of the £200 vitality invoice rebate scheme within the autumn, the way forward for the value cap, and whether or not the market will stay aggressive.

Also scheduled to seem earlier than the committee are the bosses of collapsed suppliers Bulb and Avro, who can be scrutinised over the administration of their corporations earlier than they went out of business final yr.

A major a part of the rise within the value cap this month is attributed to the cost of reallocating clients from the 29 corporations which have ceased buying and selling for the reason that vitality disaster began to chew final summer season with a pointy improve in wholesale costs.

The Committee says the failure of Avro, which folded owing £90m to clients, is anticipated to cost shoppers £700 million.

Bulb was successfully nationalised – put right into a Special Regime overseen by the regulator, Ofgem, and the federal government – after being deemed too huge to fail. The authorities is looking for a purchaser to take it over amid stories that its life assist association might hit £3 billion.

7 April: Govt Energy Strategy Adopts Long Term Focus, Ignores Immediate Price Crisis

The authorities has printed its British Energy Security Strategy, with the emphasis on transferring to low-carbon era and boosting UK vitality self-sufficiency within the subsequent 10-15 years. But the initiative does little to handle urgent considerations concerning the affordability of vitality throughout the present cost of residing disaster.

The authorities says: “Consumer bills will be lower this decade than they otherwise would be as a result of the measures this government has taken.”

There have been calls from opposition MPs and client advocates for the federal government to name an emergency Budget to handle the squeeze on family funds. Critics of the general strategic method have additionally argued that extra emphasis needs to be given to bettering vitality effectivity, for instance, by better subsidies for insulation of UK housing inventory.

The new vitality technique says the federal government will assist the manufacturing of home oil and gasoline within the nearer time period, however this exercise is unlikely to scale back the probability of one other hike within the home vitality value cap in October.

The cap – adjusted twice yearly – displays actions in wholesale vitality costs. October’s cap will bear in mind costs within the six months to the tip of July, that are being inflated by fears of provide, partly because of the battle in Ukraine.

The authorities’s ambition to de-carbonise vitality manufacturing will see the acceleration of the deployment of wind, new nuclear, photo voltaic and hydrogen. It says this might see 95% of electrical energy by 2030 being low carbon – there’s a authorized requirement for the UK to attain internet zero carbon emissions by 2050.

Some critics have urged that vitality payments – a lot of which elevated by 54% on 1 April when the value cap was elevated – might be diminished by £100 within the short-term by the removing of so-called ‘green levies’, which assist fund environmentally-friendly vitality initiatives.

Nuclear initiative

The authorities technique says nuclear era – which it calls a secure, clear, and dependable supply of energy – will signify as much as round 25% of the UK’s projected electrical energy demand.

A brand new authorities physique, Great British Nuclear, is being set as much as convey ahead new tasks “as soon as possible this decade”, together with Wylfa web site in Anglesey. The technique doc says as much as eight new reactors might be constructed.

Other plans embrace:

Offshore wind: There are plans to generate as much as 50GW by 2030 – ample to energy all UK properties. Planning reforms are meant to chop approval occasions for brand spanking new offshore wind farms from 4 years to at least one yr.
Onshore wind: The authorities will discover the potential to reward communities who host new onshore wind infrastructure with assured decrease vitality payments. This would probably counter objections from these against onshore wind farms on aesthetic grounds.
Oil and gasoline: Licences for brand spanking new North Sea oil and gasoline tasks can be issued later this yr. This is a controversial transfer that can draw fireplace from the environmental foyer, however the authorities says home manufacturing of fossil fuels will increase UK gas safety and that producing gasoline within the UK has a decrease carbon footprint than importing it from overseas.
Heat pumps: There can be Heat Pump Investment Accelerator Competition in 2022 price as much as £30 million to make British warmth pumps, which scale back demand for gasoline.Grants of £5,000 are presently available to households seeking to set up warmth pumps.
Solar: The authorities desires to extend the UK’s photo voltaic electrical energy era capability by an element of 5 by 2035. It says it is going to seek the advice of on the planning guidelines for photo voltaic tasks, significantly on home and business rooftops.
Hydrogen: The technique desires to double hydrogen manufacturing capability by 2030, with no less than half coming from inexperienced hydrogen, with extra offshore wind energy getting used to convey down prices.

31 March: Ofgem Wades Into Energy Meter Reading Furore

Energy market regulator Ofgem is ‘engaging with suppliers’ following a number of stories of shoppers being unable to submit meter readings forward of the 54% improve in its value cap, efficient tomorrow (1 April).

Customers are attempting to submit up-to-the-minute readings forward of the value improve, which impacts these on variable charge tariffs, in order that they’ll guarantee they pay at this time’s decrease charge for the vitality they use in March.

The concern is that, in the event that they depend on their provider’s estimate of how a lot vitality they’ve used, a few of their March utilization is likely to be billed on the greater, April charge.

The cap on prepayment meters payments can be growing tomorrow, however as clients listed here are on pay-as-you-go phrases, there isn’t any have to log a meter studying.

In a collection of tweets this afternoon, Ofgem mentioned: “We are conscious some vitality suppliers are having hassle with their web sites at this time, affecting individuals with the ability to submit meter readings or access their on-line account. We are partaking with suppliers on the difficulty.

“Consumers who expertise points ought to contact their provider immediately, and take an image of their meter studying if excessive contact volumes imply they’re unable to get by way of.

“Suppliers must take all reasonable steps to provide ways for consumers to access their account information, including submitting meter readings.”

Quite a lot of replies to the tweets identified that customers usually are not in a position to contact their suppliers exactly as a result of web sites and phonelines have been overwhelmed by the variety of individuals attempting to get in contact.

Anyone frightened about reaching their provider at this time is suggested to take {a photograph} of their meters (gasoline and electrical energy) and e-mail them to their very own account so that they have a report of utilization as much as at this time’s date.

This can then be submitted at a later date or saved at hand in case of a dispute sooner or later.

Those with sensible meters can have their readings despatched mechanically to their provider, however they’re in fact at liberty to take and retain {a photograph} if they need.

Those on fastened charge vitality tariffs will see no change to their payments from tomorrow as their offers are exterior the scope of the value cap.

“People are worried”

In one other tweet thread, Emma Pinchbeck of provider commerce physique Energy UK, mentioned web sites are down due to the dimensions of the client inquiries: “People are very frightened, and naturally they’ve seen client teams say at this time is the deadline for submitting readings.

“We’re simply checking in with members however notice: a) some suppliers gained’t implement new costs tomorrow b) most will take meter readings after at this time and have put different measures in place for submission. Don’t panic, examine meter, hold studying: many suppliers have data on their twitter.

“Meanwhile, website & call centre failures for industry & consumer groups reflect scale of concern. It highlights how scary these price rises are, and what industry has been saying to Gov: the high gas price isn’t just an issue for vulnerable customers, and more needs to be done.”

Yü Energy Takes On Whoop, Xcel Power Customers

Yü Energy Retail Limited, a agency supplying 20,000 UK premises, is taking over clients from Whoop Energy and Xcel Power Limited, which ceased buying and selling final week (see story under).

As it the case when suppliers exit of business, the market regulator, Ofgem, ran a aggressive tendering course of and recognized Yü Energy as one of the best candidate for purchasers of the failed corporations.

Yü Energy is primarily generally known as a business vitality provider, nevertheless it posted a reassuring message on its web site to the the 50 home clients transferring throughout from Whoop: “Ofgem decided that we were the best people for the job. We proved we were able to take over your supply and are committed to bringing you on board. Yü Energy is a strong business with a long-term strategy and the ability to ride out the current challenges in the energy industry.”

Domestic clients can be transferred to a tariff protected by the Ofgem value cap (see tales under). Business vitality tariffs usually are not ruled by the value cap. Commercial clients can be moved to a set charge tariff, with costs introduced within the coming days.

Anyone wishing to change provider can store round however are suggested to attend till the switch has been accomplished. Customers won’t be charged exit charges in the event that they resolve to change to a different provider. For extra info clients can go to www.yuenergy.co.uk.

At current, there aren’t any home tariffs available for lower than the present value cap, which is in place till 31 March. On 1 April it is going to improve by 54% to take account of rising wholesale costs.

The cap for a family with common consumption on a dual-fuel normal variable charge tariff, paying by direct debit, will rise by £693 from £1,277 to only below £1,971. Prepayment meter clients will see a rise of £708 from £1,309 to £2,017, once more for typical utilization.

Actual payments will at all times be decided by consumption, so the cap isn’t a restrict on how a lot can be charged to any given client.

Customers’ provides will proceed as regular following the change over to Yü Energy on 19 February 2022. They can be contacted over the approaching days concerning the modifications. They ought to take a meter studying as quickly as doable.

18 February: Further Two Firms Cease Trading

Two of the vitality markets smaller gamers, Whoop Energy and Xcel Power, have introduced they’re ceasing to commerce.

This brings to twenty-eight the variety of corporations which have closed their doorways for the reason that present vitality market disaster deepened final August with a spike in wholesale costs.

Whoop Energy suppliers gasoline and electrical energy to 262 buyer accounts – 50 home and 212 non-domestic. Xcel Power has 274 non-domestic gasoline clients.

Under the security internet protocol operated by Ofgem’s, the vitality market regulator, clients’ provide will proceed and funds that home clients have paid into their accounts can be protected, the place they’re in credit score.

Domestic clients can even be protected by the vitality value cap when being switched to a brand new provider. The value cap, presently £1,277 a yr for twin gas customers with common consumption, will rise to £1,971 on 1 April (from £1,309 to £2,017 for these with pre-pay meters).

The existence of the cap has sheltered shoppers from the worst influence of rising vitality costs, though the forthcoming 54% improve is unprecedented and is forecast to tip thousands and thousands into monetary hardship.

For suppliers, the cap has meant they’ve been successfully promoting vitality at a loss, therefore {the catalogue} of company failures in just lately months.

Customers of Whoop Energy and Xcel Power Ltd can be contacted by their new provider, which can be chosen by Ofgem, sooner or later. Ofgem’s recommendation to affected clients within the meantime is to:

• wait till a brand new provider has been appointed and you’ve got been contacted by them within the following weeks earlier than seeking to change to a different vitality provider.
• take a meter studying prepared for when your new provider contacts you to make the method of transferring clients over to the chosen provider and honouring any funds that home clients have paid into their accounts, the place they’re in credit score, as clean as doable.

16 February: Ofgem Battles Market Turmoil With ‘Stabilisation’ Measures

With the startling 54% improve in its home value cap simply six weeks away on 1 April, vitality regulator Ofgem has introduced two measures designed to enhance the steadiness of the market and protect shoppers from additional steep will increase.

It hopes to scale back the variety of firms that may go bust on account of the persevering with excessive value of gasoline and electrical energy on wholesale markets.

The cost of reallocating clients of the 26 firms which have failed for the reason that disaster deepened final summer season is estimated to be £4 billion, which is able to feed by way of to clients’ payments.

The first measure can be to require suppliers to supply all their tariffs to current in addition to new clients, reasonably than supply unrealistically low-cost offers to new clients to get their business on the books.

According to Ofgem, this may “assist to stabilise the market within the quick time period by appearing as a break on unsustainable value competitors when cheaper tariffs return and buyer switching picks up once more.

“It will also limit price discrimination by suppliers and help to improve consumer trust and confidence in the retail market after the challenges of this winter, improving access to cheaper tariffs for consumers who may be less willing or able to switch supplier, particularly those in vulnerable situations.”

The second measure is the potential to levy a market stabilisation cost if wholesale costs fall considerably after the brand new value cap stage takes impact.

This would see firms which might be buying new clients pay a cost to these shedding the business, to clean out the acute results of wholesale value volatility.

Ofgem concedes that, if the cost is triggered, it is going to scale back “to some degree” the most affordable tariffs available available in the market. It provides: “However, there will still be significant savings available to active consumers looking to switch.”

Additionally, the anticipated discount within the variety of firms going out of business will scale back upward strain on payments.

Both measures are anticipated to be eliminated within the autumn when Ofgem hopes to usher in additional reforms to its value cap mechanism.

These embrace introducing quarterly opinions (at current the cap is reviewed every February and August with any change taking impact in April and August) and a discount within the discover interval suppliers are required to provide their clients from two months to at least one.

9 February: Households ‘Paid’ To Cut Winter Energy Usage

Households will get credit score on their vitality payments by limiting their vitality consumption throughout peak hours this winter, as a part of a brand new National Grid plan.

The National Grid Electricity System Operator (ESO) is partnering with Octopus Energy to see if, between 11 February and 31 March, it might probably higher match vitality demand with provide – and it’ll supply one-off ‘financial incentives’ to these participating.

Around 1.4 million Octopus Energy clients with sensible meters can be eligible for rewards in the event that they scale back their energy consumption under what they’d usually use between certainly one of a variety of two-hour time slots every day all through the two-month trial.

Each day’s two-hour window – 12-2am, 9-11am or 4.30-6.30pm – can be introduced by 4pm the day prior to this, giving these concerned the possibility to decide in or out. Those who decide in will be capable of earn as much as 35p of free vitality for each kilowatt hour (kWh) they don’t use.

The trial might scale back energy demand by as a lot as 150 Megawatts (MW) throughout every two-hour occasion, or 75 megawatt hours (MWh). For context, the common UK family makes use of round 15,000 kilowatt hours (kWh) of gasoline and electrical energy per yr – equal to fifteen MW.

ESO will use information gathered throughout the pilot to tell its plans to run a zero-carbon grid for sure intervals by 2025, and a totally decarbonised grid by 2035. It hopes the information will enable it to steadiness provide and demand extra effectively, with financial savings handed on to households.

Isabelle Haigh of ESO mentioned: “Encouraging households to have interaction in thrilling climate-friendly vitality alternatives like this trial can be essential in our transition to internet zero.

“System flexibility is important to assist handle and scale back peak electrical energy demand and hold Britain’s electrical energy flowing securely.

“This trial will provide valuable insight into how suppliers may be able to utilise domestic flexibility to help reduce stress on the system during high demand, lower balancing costs and deliver consumer benefits.”

Energy costs

The trial comes lower than every week after the vitality regulator Ofgem introduced a 54% improve to its vitality value cap for 22 million households in England, Scotland and Wales – up from £1,277 to only below £1,971 for these with common consumption ranges.

It means a family with common consumption on a dual-fuel normal variable charge tariff, paying by direct debit, pays an additional £693 for vitality from April 1.

The authorities responded to the unprecedented improve by saying £350 price of assist for round 30 million households – comprising a £150 Council Tax rebate and a £200 mortgage to be repaid over 5 years from 2023.

4 February: Govt Comes Out Swinging On Energy ‘Myths’

With shoppers reeling from the 54% hike within the vitality value cap from 1 April introduced yesterday (see tales under), the federal government has printed an article – Busted: the 9 huge myths on vitality within the UK – meant to dispel “some of the popular myths around energy price rises in the UK.”

The impact of the value cap improve can be to push up common annual payments from £1,277 to £1,971 (from £1,309 to £2,017 for these with pre-pay meters).

The scale of the rise, whereas broadly anticipated, has nonetheless proved to be an enormous shock for the near-30 million households that can be affected.

Government proposals to melt the blow – a £200 discount in payments in October (to be repaid over 5 years) and a £150 Council Tax rebate (that doesn’t should be repaid) for these in bands A to D to coincide with the cap hike in April – have been branded as insufficient and poorly focused by client teams and opposition events.

There have been requires extra money to be diverted in the direction of eradicating gas poverty, which is when required spending on vitality pushes a family under the official poverty line.

Commentators are pointing to Shell’s big improve in working income – as much as £12 billion for 2021, additionally introduced yesterday – and urging the federal government to impose a windfall tax on vitality manufacturing firms which have benefited from a spike in costs on wholesale markets.

There is not any indication the federal government is contemplating such a transfer.

We’ve printed the federal government’s article under to provide an perception into official considering on the vitality market, and added our personal feedback below every ‘myth’.

Myth 1. Isn’t the Energy Price Cap inflicting these issues?

“No, rising vitality costs are the results of a world spike in gasoline costs, which has quite a few causes together with rebounding international demand as COVID-19 lockdowns ease and a better liquified pure gasoline demand in Asia.

“In reality the Energy Price Cap continues to guard thousands and thousands of shoppers and ensures they pay a good value for his or her vitality, regardless of the sudden rise of wholesale vitality prices.

“But in mild of continued cost of residing pressures, the federal government has introduced a package deal of assist to assist households with rising vitality payments, price £9.1 billion in 2022 to 2023.

“This contains:

a £200 low cost on their vitality invoice this Autumn for home electrical energy clients in Great Britain. This can be paid again mechanically over the following 5 years
a £150 non-repayable rebate in Council Tax payments for all households in Bands A-D in England
£144 million of discretionary funding for native authorities to assist households who want assist however usually are not eligible for the Council Tax rebate

“The devolved administrations are also receiving around £715 million funding through the Barnett formula as usual where UK government support doesn’t cover Scotland, Wales or Northern Ireland.”

We say: Critics argue that, even when a family receives the complete £350, this may solely be roughly half of the everyday improve in payments from 1 April – with £200 of it within the type of a mortgage in October that can should be repaid at £40 a yr through greater payments for 5 years, beginning 2023.

There are additionally considerations concerning the administration of the scheme, with solutions that some individuals who don’t obtain the mortgage should need to pay greater payments in the event that they change into vitality clients in subsequent years.

2. Will the brand new schemes not simply encourage greater costs, reasonably than extra provide?

“No, because the Energy Price Cap remains in place to protect consumers.”

We say: Energy corporations won’t be able to cost greater than the cap for normal variable charge tariffs. But the cap is broadly anticipated to extend once more when it’s reviewed in August for implementation in October. So whereas the discharge of presidency money won’t inflate costs, shoppers are nonetheless going through an additional hike of their payments.

3. Isn’t this all simply an opportunity for oil and gasoline firms to make huge income at our expense?

“Neither oil or gas companies or energy supply companies will benefit financially from the new schemes announced today and all the money will be passed through to domestic energy consumers.”

We say: The vitality value cap is structured in such a approach to stop vitality suppliers making extreme income – that was the considering behind its introduction in 2019. But the notion stays that customers are bearing an unfair burden in an period of excessive wholesale costs.

4. Why are we nonetheless exporting gasoline to different international locations reasonably than boosting our personal provide?

“As an internationally traded commodity, gasoline is exported and imported in step with value indicators. Broadly, the UK imports greater than it exports.

“The UK continues to benefit from strong security of gas supply, benefitting from highly diverse sources, including through one of the largest liquified natural gas import infrastructures in Europe.”

We say: Critics level out that the UK’s gasoline storage capability has been severely diminished in recent years, leaving the nation uncovered to short-term value fluctuations as a result of there isn’t any various to paying market charges to keep up provide.

5. Why will we hold closing down coal energy stations? Wouldn’t this assist with preserving vitality costs down?

“Closing coal plants is not increasing energy prices. In line with our net zero target, the government has committed to phasing out unabated coal-fired power generation by 2024. Closure of coal units ahead of this date is a commercial decision for the companies involved.”

We say: The authorities has to steadiness its dedication to transferring to a internet zero carbon financial system by 2050 with the necessity to ‘keep the lights on’ within the meantime. It can be pressured to make tougher selections with regard to using carbon fuels, together with pure gasoline, as that date approaches.

If credible, dependable alternate options to fossil fuels usually are not introduced on stream within the close to time period, gasoline is more likely to stay excessive within the combine, with all that suggests for home payments.

6. Why haven’t we upped our home gasoline manufacturing within the North Sea or granted new drilling licences?

“Roughly round half the UK’s gasoline provide comes from home sources, and the UK’s gasoline sector has been maximising manufacturing the place doable by way of this winter.

“Most imports come from dependable suppliers akin to Norway. We even have one of many largest liquefied pure gasoline (LNG) infrastructures in Europe.

“We have additionally been working with oil and gasoline operators within the UK to develop extra fields. Three new gasoline streams got here on-line on the finish of final yr, with extra upcoming. However, the most important elements influencing gasoline costs are attributable to worldwide exercise extending past Great Britain’s home manufacturing.

“Less than 3% of our gas was sourced from Russia in 2020.”

We say: Private firms extracting gasoline from the North Sea and different fields across the UK promote their merchandise on the open market the place they’ll get one of the best value. They are below no compulsion to promote into the UK market at a subsidised or managed cost, and it’s exhausting to see a Conservative authorities altering this technique.

7. Aren’t different international locations doing greater than the UK?

“It is necessary to notice that greater wholesale gasoline costs are being confronted internationally resulting from a number of elements in provide and demand – with some international locations in Europe specifically going through rather more extreme safety of vitality provide challenges than the UK.

“The package of measures announced by the Chancellor will mean millions of households receiving up to £350 to help with the cost of living. That is broadly in line with the support offered by most of our European neighbours, and in many cases is more generous.”

We say: Different international locations are adopting totally different options to the overall downside of excessive wholesale costs. For instance, the French authorities has mentioned that vitality shoppers ought to solely see a rise in payments of 4%, with the nationwide vitality operator, EDF, accountable for prices above that stage.

However, as EDF is state-owned by the French authorities, these prices are more likely to change into a part of the nation’s common taxation burden, so this in a single sense might be seen as monetary sleight of hand.

8. Have oil firms been doing share buybacks, reasonably than investing?

“Decisions on the scale of capital investment in production and the way returns are made to investors are commercial decisions for companies. The UK remains an attractive destination for companies to invest in oil and gas production.”

We say: The Conservative social gathering is rooted in free-market economics. It is tough to see that altering, though battle in Ukraine, with related disruption to gasoline provides, would possibly imply all bets are off, no less than quickly.

9. Has the UK not gone quick sufficient on inexperienced vitality?

“The authorities is doubling its efforts to generate extra clear, reasonably priced energy on this nation to fulfill the goal of decarbonising Britain’s electrical energy system by 2035.

“Since 2010 we have increased the percentage of power from renewables from 7% to 43% as of 2020, and our latest allocation round of the successful Contracts for Difference scheme is seeking up to 12 GW of additional renewable capacity. This would be more than the previous 3 rounds combined.”

We say: The authorities has given itself extremely formidable inexperienced vitality targets that can require sustained funding. Its progress on these measures can be intently monitored, each by the inexperienced foyer and by these involved with safety of provide.

Sustained PR marketing campaign

The authorities is already grappling with a cost of disaster that features probably greater mortgage prices following yesterday’s improve within the Bank charge to 0.5%, greater nationwide insurance coverage contributions from April, and inflation above 5% and predicted to hit 7% within the coming months.

The surge within the vitality value cap is including to its woes, and there can be a contemporary spherical of unfavourable reporting when the value cap rise takes impact on 1 April. We can in all probability anticipate to see additional messaging of this nature within the coming weeks.

Govt Responds To Price Cap Hike With £200 Bills Discount Loan

Close on 30 million households will profit to the tune of as much as £350 in diminished payments and rebates following the 54% rise within the vitality value cap introduced earlier at this time (see story under).

The Chancellor Rishi Sunak advised the House of Commons this morning that each one home electrical energy clients will get £200 off their vitality payments from October. Additionally, 80% of households will obtain a £150 Council Tax rebate from April.

Energy suppliers will apply the low cost to twenty-eight million home electrical energy clients from October, with the Government assembly the prices. The low cost will then be recovered from individuals’s payments in equal £40 instalments over the following 5 years.

This will begin from 2023, when the federal government says international wholesale gasoline costs – the prime purpose for the 54% improve within the value cap – are anticipated to come back down.

Households in England in council tax bands A-D will obtain a £150 rebate, made straight by native authorities from April. This won’t should be repaid. The authorities can be making available discretionary funding of £144 million to assist vulnerable individuals and people on low incomes that don’t pay council tax, or that pay for properties in bands E-H.

Devolved governments in Scotland, Wales and Northern Ireland are anticipated to obtain round £565 million of funding on account of the Council Tax Energy Rebate in England. Northern Ireland will obtain £150 million of extra funds to supply assist for vitality bill-payers.

The Chancellor additionally at this time confirmed plans to go forward with current proposals to increase eligibility for the Warm Home Discount by almost a 3rd to a few million vulnerable households will now profit. The deliberate £10 uplift to £150 from October has additionally been confirmed.

3 February: Ofgem Confirms Huge Rise In Price Cap

The vitality value cap, which limits how a lot corporations can cost for every unit of gasoline and electrical energy equipped to home clients, as properly any standing cost, is to rise by 54% on 1 April 2022.

This means the extent of the cap for a family with common consumption on a dual-fuel normal variable charge tariff, paying by direct debit, will rise by £693 from £1,277 to only below £1,971. Actual payments will at all times be decided by the quantity of vitality used.

Prepayment meter clients will see a rise of £708 from £1,309 to £2,017, once more for typical utilization.

The cap applies to round 22 million households in England, Scotland and Wales. Northern Ireland doesn’t have a value cap.

The improve is because of sustained excessive wholesale gasoline costs within the six months to the tip of January – the interval utilized by Ofgem, the market regulator which units the cap, to find out what the brand new stage needs to be. Once in impact from April, the cap is because of stay on the similar level till the tip of September, when will probably be adjusted once more.

However, Ofgem is to unveil measures later this week which will enable it to make changes extra usually than six-monthly. It mentioned: “Further measures include enabling Ofgem to update the price cap more frequently than once every six months in exceptional circumstances to ensure that it still reflects the true cost of supplying energy.”

Such has been the cost of wholesale gasoline that round 30 vitality suppliers have gone out of business in recent months, with their clients transferred to bigger rivals. The impact of the cap has been to stop suppliers from charging sufficient to cowl the cost of shopping for gasoline in bulk, resulting in them working at a loss.

Gas costs have risen on worldwide markets due to excessive demand put up Covid lockdown. Alternative sources of vitality, akin to wind, photo voltaic and nuclear, haven’t been in a position to meet necessities.

The authorities is to announce measures later at this time to assist beleaguered households deal with the huge escalation of prices. Rishi Sunak MP, Chancellor of the Exchequer, is to carry a press convention this night, with expectations excessive that he’ll present particulars of a fund from which vitality firms can borrow money to be able to scale back the quantity by which payments will improve.

But as this may be a mortgage, the assumption is that payments would want to stay artificially excessive, even after the gasoline provide crunch involves an finish, to fund repayments.

Ofgem Cap Update Expected Tomorrow As Govt Mulls Support Measures

Ofgem, the vitality market regulator, is anticipated to announce the following stage of its value cap tomorrow (Thursday 3 February). The cap, which dictates how a lot vitality corporations can cost per unit of gasoline and electrical energy they provide to home clients, can be adjusted on 1 April and can stay on the new stage till 30 September.

The announcement was scheduled for subsequent Monday however has reportedly been introduced ahead as a result of the federal government is eager to unveil a package deal of measures to assist hard-pressed vitality shoppers.

The cap is broadly anticipated to extend from its present stage of £1,277 a yr (for typical households on a twin gas gasoline and electrical energy tariff paying in arrears) to round £2,000 a yr.

The cap for households with pre-payment meters – presently standing at £1,309 a yr for common consumption customers – can be anticipated to rise steeply.

At current, there aren’t any cheaper alternate options to the cap, that means clients who usually are not on fastened charge offers already haven’t any possibility however to pay it. If the cap rises as anticipated, there could also be scope for suppliers to undercut it, however akin to been the rise in wholesale vitality prices up to now yr that this will show a wrestle.

The improve within the cap will stretch many family budgets to breaking level and past. In response, the federal government is anticipated to announce a package deal of measures to assist shoppers, probably as quickly as Thursday afternoon.

We will present particulars as they arrive.

24 January: British Gas Takes On Together Customers

British Gas is taking over the purchasers of Together Energy Retail after the Bristol-based provider closed its doorways final week (see story under).

The transfer was introduced by Ofgem, the vitality market retailer, which runs a security internet operation within the case of company failures. Together Energy, which additionally makes use of the model Bristol Energy, has 176,000 home clients and 1 non-domestic buyer.

Under the supply of the security internet, money that present and former home clients of the suppliers have paid into their accounts can be protected, the place they’re in credit score. Domestic clients can even be moved to a British Gas tariff that’s ruled by Ofgem’s vitality value cap.

The can be no interruption to vitality provides. Customers of Together Energy can be contacted over the approaching days concerning the modifications. If clients want to change provider, they’ll store round however are suggested to attend till the switch has been accomplished.

Customers won’t be charged exit charges in the event that they resolve to change to a different provider, though they’re extraordinarily unlikely to discover a tariff priced under the extent of the value cap, which stands at £1,277 a yr for a typical family on a twin gas deal.

Customers looking for extra info can contact British Gas.

18 January: Together Energy Retail Is First Company Failure of 2022

The UK’s beleaguered vitality sector was delivered one other blow at this time with the announcement that Together Energy Retail has gone out of business.

The agency – which additionally runs Bristol Energy – provides round 176,000 home clients, and one non-domestic buyer.

Under the security internet operated by Ofgem, the market regulator, clients’ vitality provide will proceed and funds that home clients have paid into their accounts can be protected, the place they’re in credit score.

Domestic clients can be switched to a brand new provider, with their new tariff protected by the vitality value cap.

Customers can be contacted by their new provider over the approaching weeks. This agency can be chosen by Ofgem after a tendering course of.

Ofgem’s recommendation to clients is to:

wait till a brand new provider has been appointed and you’ve got been contacted by them within the following weeks earlier than seeking to change to a different vitality provider (for the time being there aren’t any tariffs priced under these working on the stage of the vitality value cap)
take a meter studying prepared for when your new provider contacts you to make the method of transferring over to the brand new provider as clean as doable.

Together is certainly one of almost 30 suppliers which have gone bust up to now 12 months resulting from an unprecedented improve in international gasoline costs.

The value cap implies that suppliers are unable to cross on the complete cost of paying wholesale suppliers for vitality, that means they’re successfully promoting to UK clients at a loss. This is the explanation for such a quantity of company failures – and with no signal of any significant discount in wholesale costs within the close to future, there could also be extra to come back.

The value cap presently stands at £1,277 every year for a median consumption family paying for a twin gas tariff by direct debit. The new stage of the cap can be introduced on 7 February, to take impact on 1 April.

Many analysts concern it might attain £1,900 and even £2,000, pushing many family budgets to breaking level.

Ofgem, the federal government and vitality corporations are exploring methods by which to scale back the influence of any value hike on clients.

15 December: Energy Price Cap Under Review As Ofgem Gets Tough

The vitality value cap that has shielded many UK households from the complete influence of big rises in pure gasoline costs this yr might be about to vary as a part of a shake up by the business regulator, Ofgem

Rules are being introduced in to ensure the vitality market doesn’t collapse, following a yr by which 28 vitality suppliers went bust. Part of the modifications contain a overview of the value cap.

It’s been an unprecedented yr for vitality firm failures. Record pure gasoline costs – up by greater than 250% since January – have put strain on smaller suppliers with restricted reserves, forcing many to fold.

Suppliers mentioned they have been hampered by the Ofgem vitality value cap, which protected clients from spiralling costs however prevented corporations from passing on their elevated prices to invoice payers.

Ofgem is looking for views on whether or not the value cap needs to be modified to higher deal with volatility available in the market.

The value cap limits the charges a provider can cost for his or her default variable charge tariffs. These embrace the standing cost and value for every kilowatt hour (kWh) of electrical energy and gasoline. Ofgem units a brand new cap for every summer season and winter, reflecting international wholesale costs.

The new stage of the cap is introduced in August and February, and the change takes impact in April and October. The final change was a 12% improve on 1 October, taking it to £1,277 a yr for a family with common consumption ranges.

The subsequent update in April can be based mostly on an agreed components that takes account of wholesale vitality costs between August 2021 and January 2022 – which suggests it’s more likely to go up. Some commentators have mentioned {that a} value rise of £300-£400 is on the playing cards.

The cap is because of finish by the tip of 2023, however could also be modified or withdrawn sooner in mild of 2021’s vitality market troubles.

Ofgem’s announcement that it’ll overview the vitality value cap coincides with a pointy improve in inflation.

Consumer Price Index inflation rose from 4.2% to five.1% in November, in line with Office for National Statistics (ONS) information. Independent think-tank Resolution Foundation mentioned the figures have been more likely to put a squeeze on residing requirements and predicted inflationary pressures would proceed into early 2022.

New Rules For Suppliers

From January 2022, suppliers must endure monetary stress testing to ensure they’ll face up to market pressures that would sink them if their funds aren’t strong sufficient.

Ofgem, which is bringing within the new guidelines, will step in the place weaknesses are recognized and work with suppliers to enhance their conditions.

As properly because the monetary stress testing, provider administration boards must perform self-assessments of their management frameworks and report again to Ofgem. The watchdog can even strengthen its current ‘fit and proper’ vitality licence standards.

Other measures confirmed by the regulator embrace exploring how finest to tighten guidelines round defending credit score balances, consulting on new monetary licence necessities, and contemplating making suppliers pause their enlargement plans past sure milestones (akin to 50,000 and 200,000 clients) till Ofgem is glad they’re steady sufficient.

Many of this yr’s company failures had fewer than 200,000 clients.

Ofgem’s Jonathan Brearly mentioned: “Today, I’m setting out clear motion in order that we’ve strong stress testing for suppliers to allow them to’t cross inappropriate threat to shoppers. I need to see extra checks on workers in vital roles, and higher use of knowledge to assist us regulate.

He added: “Our priority has been, and will always be, to act in the best interests of energy consumers. The months ahead will be difficult for many, and we are working with the government and energy companies to mitigate the impact as much as we can, particularly for the most vulnerable households.”

3 December: Zog Customers Move To EDF, Scottish Power Takes On Entice, Orbit Customers

Zog Energy, which has 11,700 home clients, has ceased buying and selling. Under regulator Ofgem’s security internet, which comes into play when a business fails, Zog’s clients’ vitality provide will proceed and funds that home clients have paid into their accounts can be protected, the place they’re in credit score.

Domestic clients can even be protected by the vitality value cap when they’re switched to a brand new provider by Ofgem, as a part of its Supplier of Last Resort protocol. Customers can be contacted by their new provider, which can be chosen by Ofgem following a aggressive tender course of amongst different provider

Update: Ofgem introduced on 3 December that Zog’s clients can be taken on by EDF.

Ofgem’s recommendation to affected clients is to attend to be contacted by EDF with particulars of your the tariff and take a meter studying as quickly as doable to clean the switch course of. Switching to a brand new provider isn’t advisable throughout the appointment of a brand new provider.

Additionally, the present market circumstances imply there aren’t any offers available at lower than the Ofgem value cap, that means switching would convey no monetary profit.

Separately, Ofgem has appointed Scottish Power to tackle the purchasers of Entice Energy and Orbit Energy, which closed for business final week (see story under). The 70,000 clients concerned can be contacted by Scottish Power over the approaching days and weeks. There can be no interruption to produce and the tariff they’re moved to can be managed by Ofgem’s value cap.

In an announcement on its web site, Zog blamed its resolution on the failure of its wholesale gasoline provider, Contract Natural Gas (see story under from 3 November). The discover says: “Zog Energy was based to supply its clients with the absolute best worth vitality.

“Throughout our time we’ve invested in one of the best worth know-how to maintain prices down and bought our gasoline prematurely from Contract Natural Gas Ltd to maintain the promise we made to clients to produce easy low-cost home gasoline.

“However, Contract Natural Gas Ltd has withdrawn from the wholesale market and ceased to commerce. Unfortunately, the directors of Contract Natural Gas Ltd are unwilling to switch the gasoline hedges we had beforehand agreed. This has put us in an untenable position of getting to buy gasoline on the present market charge and we’ve no selection however to stop to commerce.

“Your energy supply will now be transferred to a new supplier. You need not worry; your supply is secure and funds that you’ve paid into your accounts will be protected if you are in credit.”

25 November: Taxpayer On Hook For £1.7bn To Keep Bulb Operational, Entice And Orbit Cease To Trade

Failed vitality agency Bulb can be funded by the taxpayer as much as a reported £1.7 billion after it was placed into the Special Administration Regime (SAR) by the federal government and the market regulator, Ofgem.

The SAR course of is designed to make sure there isn’t any change to Bulb’s clients’ provide and to guard any credit score balances they could have – clients have been advised they should take no motion right now. Anyone contemplating switching away from Bulb is more likely to discover that there aren’t any aggressive tariffs available and that their best choice is to remain put.

The administrator, Teneo, will run the agency utilizing funds supplied by the taxpayer till its future is settled, which might imply promoting it complete or partly, or closing it down and transferring its clients to different corporations.

The authorities says it is going to work to recoup its outlay, “ensuring that we get the best outcome for Bulb’s customers and the British taxpayer.”

Bulb is the primary agency to enter the SA regime, which was created in 2011 in anticipation of a giant provider going to the wall. With round 1.7 million clients, it’s over thrice the scale of Avro, the most important agency to stop buying and selling in recent months.

The 20-plus different vitality corporations which have gone bust for the reason that summer season have been by way of Ofgem’s Supplier of Last Resort (SoLR) course of, whereby a aggressive bidding course of is held to search out one other provider that’s keen to tackle the failed firm’s clients.

But wholesale costs are so excessive relative to Ofgem’s value cap, it’s thought no provider could be keen to tackle Bulb’s business – it might successfully imply their working at a loss.

Update: Entice Energy, which contains each Entice Energy Supply Limited and Simply Your Energy Limited, and Orbit Energy have introduced at this time (25 November) that they’re ceasing to commerce. As with different provider failures (see tales under), clients’ provides can be assured by Ofgem, as will in-credit balances they’ve constructed up. Customers are suggested to not change, however to take a meter studying and wait to listen to from their new provider, as appointed by Ofgem.

Business as typical

In an announcement to clients on its web site, Bulb mentioned: “We’ll proceed to function as typical so that you don’t have to take any motion. Your tariffs usually are not altering, and the value cap applies to all client vitality tariffs. If you pay to your vitality by top-up, your top-ups will proceed to work as regular. If you’re within the means of switching to or from Bulb, your change will proceed.

“We’ll continue to supply 100% renewable electricity and 100% carbon neutral gas, and to protect credit balances for our domestic and business members throughout this process.”

Fuel costs on worldwide wholesale markets have peaked just lately, with fears of a chilly winter forward inflicting a surge in demand. This will heap additional strain on vitality suppliers who can not cost extra for normal variable charge tariffs than the Ofgem value cap, which stands at £1,277 a yr for a typical family.

Fixed charge tariffs, which aren’t topic to the cap, are on sale for a number of hundred kilos greater than the variable tariff cap.

The cap is reviewed and adjusted twice-yearly. It is probably going the following overview, in February, will see a pointy improve to mirror greater wholesale costs. Some commentators recommend it might rise to £1,600 or extra when the change is applied in April.

Ofgem has introduced a wide-ranging session on the way in which the cap operates (see story under).

22 November: Bulb In Special Admin As Market Woes Intensify

Green vitality provider Bulb has introduced it has taken “the difficult decision to support Bulb being placed into special administration”. The is the primary time the association – designed by the federal government and the regulator, Ofgem, to come back into pressure following the failure of a giant vitality provider – has been used.

The transfer means Bulb is the most important firm to hit the rocks for the reason that vitality market was plunged into disaster by hovering wholesale costs earlier this yr. Bulb has round 1.7 million clients within the UK, making it the seventh largest provider. Some 24 smaller suppliers have already ceased buying and selling in 2021.

Bulb says particular administration “is designed to protect Bulb members, ensuring there’s no change to your supply and your credit balance is protected.”

The course of means Bulb will proceed to function as regular, and there’s no want for purchasers to take any motion. The particular administrator can be introduced shortly. The association will stay in pressure – paid for by taxpayers – till Bulb is ready to restore it personal monetary well being, the corporate is offered, or it’s wound up and its clients are moved to a different provider.

Bulb presents variable charge offers which might be managed by the vitality value cap, which is presently at £1,277 a yr for households with typical utilization. At current, there aren’t any tariffs available below the value cap elsewhere in the marketplace, that means it’s almost actually not price switching away from Bulb given the protections afforded by the particular administration regime.

Bulb’s measurement means it’s unrealistic for one more firm to tackle its buyer base, as has been the case with the 20-plus firms which have gone bust in recent months below Ofgem’s ‘supplier of last resort’ regime. Companies taking over clients in such eventualities usually are not allowed to cost greater than the Ofgem value cap (£1,277 a yr for common households), and lots of say the extent of wholesale costs would pressure them to function at a loss consequently.

A discover on Bulb’s web site says: “Special administration is designed to permit Bulb to proceed to function as typical so that you don’t have to take any motion. Your tariffs usually are not altering, and the value cap applies to all client vitality tariffs.

“If you pay for your energy by top-up, your top-ups will continue to work as normal. If you’re in the process of switching to or from Bulb, your switch will continue. Smart meter installations and other metering work will continue.”

An Ofgem spokesperson mentioned: “Customers of Bulb do not need to worry – Bulb will continue to operate as normal. Ofgem is working very closely with Government. This includes plans for Ofgem to apply to Court to appoint an administrator who will run the company. Customers will see no disruption to their supply and their account and tariff will continue as normal. Bulb staff will still be available to answer calls and queries.”

Bulb can be notable for providing 100% renewable electrical energy and 100% carbon impartial gasoline.

19 November: Ofgem Consults On Price Cap

Energy market regulator, Ofgem, has at this time printed a collection of consultations on the way forward for its value cap. The purpose is “to ensure that the price cap reflects the costs, risks and uncertainties facing energy suppliers.”

This might imply the cap being adjusted extra often than each six months (in April and October), which is the cycle at current.

Many suppliers declare the extent of the cap – £1,277 every year for normal variable charge tariff clients with common consumption and £1,309 every year for prepayment tariff clients with common consumption – is ready too low relative to wholesale market costs for electrical energy and, significantly, gasoline.

Companies argue they’re unable to cross on the true cost of shopping for vitality, leading to them working at a loss. Over 20 suppliers have ceased buying and selling in recent months.

However, the cap has already risen considerably this yr – by 9% in April and by 12% in October – inserting big strain on family budgets. The Office for National Statistics and the Bank of England have acknowledged that vitality costs are a key contributing issue to inflation hitting its highest stage for 10 years final month, at 4.2%.

The cap can be adjusted once more in April 2022, with the change introduced in February. There are fears that the rise might add an additional £300-£400 to annual payments.

One of the consultations issued at this time will take a look at whether or not recent market volatility “has caused the level of the price cap to materially depart from the efficient cost level allowed for in the price cap”.

In different phrases, Ofgem desires suggestions on whether or not the present stage of the cap is ample to permit suppliers to cowl their bills and make an agreed stage of income.

A second session will analyse the method for updating the methodology that determines the extent of the cap. Ofgem is proposing to change its licence to permit it to amend the cap exterior the present April-October six-month cycle in distinctive circumstances.

Further particulars of those and different consultations on technical facets of the value cap can be found here.

Stakeholder views are invited on any facet of those paperwork by 17 December 2021, with findings and selections to be printed within the New Year.

16 November: Neon Reef, Social Energy Cease Trading

Update 22 November: British Gas has been appointed the ‘supplier of last resort’ for purchasers of Neon Reef and Social Supply, which ceased buying and selling earlier this month (see following story).

Two extra vitality firms have ceased buying and selling, bringing the entire of failed suppliers in 2021 alone to 24. The unprecedented market upheaval is attributed to sustained excessive costs on wholesale markets, which suppliers are largely unable to cross on the their clients due to the regulatory value cap (see tales under).

The two latest casualties are Neon Reef and Social Energy Supply. Last week Ofgem listed Social Energy Supply among the many firms that have been in default on their required funds to the vitality market Feed-in-Tariff (see under).

Neon Reef provides round 30,000 home electrical energy clients, and Social Energy Supply Ltd provides round 5,500 home clients.

Under the security internet preparations maintained by the regulator, Ofgem, each corporations’ clients will see no interruption to their provide, and funds paid into their accounts can be protected, the place they’re in credit score. As is at all times the case when an organization goes out of business, Ofgem will appoint a brand new provider for every agency’s home clients, who can be protected by the vitality value cap when switched to the brand new agency.

This means their new tariff will cost not more than £1,277 every year if they’re a typical family with common consumption (£1,309 for prepayment clients). The cap regulates the quantity suppliers can cost per unit of gasoline and electrical energy and for any standing cost, so precise payments are at all times decided by the quantity of vitality used.

As some clients of the failed corporations might have been on cheaper offers, they could see their payments rise once they transfer to their new provider.

Ofgem will appoint new suppliers within the coming days after a aggressive bidding course of. The newly-appointed corporations will then contact clients with particulars of the brand new preparations. Customers are suggested to not change till the method is full, however they’re advisable to take a meter studying as quickly as doable to clean the switch course of from the old agency to the brand new one.

12 November: Ofgem Calls In £575,000 Of Supplier Debts, Threatens To Revoke Licences

Ofgem, the vitality market regulator, has ordered 5 suppliers to pay greater than half 1,000,000 kilos they owe or face shedding their licences.

The suppliers owe Ofgem a collective £575,000 price of funds right into a authorities scheme that compensates homeowners of small-scale renewable vitality mills.

All vitality suppliers are obliged to pay into the Feed-in-Tariff scheme as a part of their licence circumstances, however 5 suppliers missed the November 10 deadline for funds this week.

The lion’s share of the lacking funds are owed by Orbit Energy (£451,296), whereas the remainder of the debt is owed by Delta Gas and Power (£46,701), Social Energy Supply (£28,735), Simply Your Energy/Entice (£28,353) and Whoop Energy (£19,013).

Ofgem has advised the suppliers to pay what they owe instantly or face enforcement motion that would embrace monetary penalties or stripping them of their licences.

The demand comes at a difficult time for smaller vitality corporations struggling to maintain up with rising wholesale costs – significantly for pure gasoline, which has risen in value by 250% for the reason that starting of the yr.

Twenty suppliers have folded for the reason that summer season, together with six this month, affecting greater than two million home vitality clients.

Affected clients are protected by Ofgem’s security internet that ensures their provide, strikes them onto one other provider’s books and preserves money they’ve paid into their accounts, the place they’re in credit score.

Customers of corporations that stop buying and selling are suggested to not change earlier than the switch to the brand new Ofgem-appointed provider is accomplished.

8 November: Ofgem Appoints Suppliers For Clutch Of Recently Bust Firms

In line with its market ‘safety net’ protocols, vitality regulator Ofgem has appointed suppliers to take over the vitality provide of shoppers of firms which have just lately ceased buying and selling resulting from hostile market circumstances, primarily hovering wholesale value for pure gasoline.

Ofgem – which regulates each home and business suppliers – says the modifications will have an effect on 70,600 home and non-domestic clients.

The modifications introduced at this time embrace:

British Gas will tackle clients of Bluegreen Energy, which provides 5,900 home clients, together with a small variety of non-domestic clients (more information here), and Zebra Power, which provides 14,800 home clients. More information here
Utilita is taking over clients of Omni Energy, which provides 6,000 home pre-payment clients. Click here for extra info
Yü Energy will tackle clients of Ampower, which provides 600 home and a pair of,000 non-domestic clients. Customers can visit here or more information
Pozitive Energy is taking over clients of CNG Energy and CNG Electricity, which provide 41,000 non-domestic clients. Customers can go here for extra info
SmartestEnergy Business Limited is taking over clients of MA Energy, which provides 300 non-domestic clients. Customers can visit this site for extra info.

Ofgem runs a aggressive course of to get one of the best deal for shoppers. The course of ensures that there isn’t any interruption to produce and that vitality provides will proceed as regular after clients are switched over to their new suppliers.

Funds paid by present and former home clients into their accounts can be protected by Ofgem, the place clients are in credit score. Domestic clients can even be protected by the vitality value cap with their new provider, which suggests they’ll pay not more than the present cap (£1,277 for common use households) on their new tariff.

Customers whose suppliers have ceased buying and selling will be contacted over the approaching days concerning the modifications. If clients want to change provider, they’ll store round however Ofgem is advising them to attend till the switch has been accomplished.

They are advisable to take meter readings as quickly as doable, as this may clean the change to the brand new provider.

If, sooner or later, clients resolve to change to a different provider, they won’t be charged exit charges.

Neil Lawrence, Ofgem’s director of retail, mentioned: “We perceive this information could also be unsettling for purchasers, however they don’t want to fret. Their vitality provide will proceed as regular, and home buyer credit score balances, in addition to some non-domestic credit score balances, can be honoured.

“Your energy supply will not be interrupted, and your newly appointed supplier will be in contact over the coming days with further information. If customers wish to switch suppliers they can shop around if they wish, but they are advised to wait until the transfer has been completed.”

Key factors:

Customers are being equipped by their new suppliers as of seven November
Non-domestic credit score balances for purchasers of Bluegreen, MA Energy, and CNG Energy and CNG electrical energy can be honoured by British Gas, SmartestEnergy and Pozitive Energy
Part of the credit score balances of non-domestic clients of Ampower can be honoured by Yü Energy
Accounts for all affected clients can be totally arrange sooner or later and the newly appointed suppliers can be in contact with clients within the coming days
Any questions clients have needs to be directed to their newly appointed suppliers. Contact particulars are available through their respective web sites
Funds that present and former home clients have paid into their accounts can be protected, the place they’re in credit score.
Current and former clients who owe money, or are in debit to their failed provider, ought to wait to listen to from their new provider or their outgoing suppliers’ directors.
Appointed suppliers can be in contact with clients with direct debits to elucidate how one can arrange their account.
Customers can discover assist and recommendation on the Ofgem web site, Facebook, and twitter feed, @ofgem. Alternatively, in the event that they want further assist, in England and Wales they’ll contact Citizens Advice on 0808 223 1133 or e-mail them through webform, in Scotland they’ll contact Advice Direct Scotland on 0808 196 8660 or use their online webchat.

3 November: Business Energy Supplier CNG Stops Trading

CNG Energy Limited, a business vitality provider with round 41,000 non-domestic clients, has gone out of business. A message on its web site reads: “After 27 years we are saddened to say CNG Energy Limited is ceasing to trade.”

The information comes after the demise earlier this week of 5 vitality corporations with home clients (see story under).

As is at all times the case when vitality corporations go bust, the regulator, Ofgem, will guarantee continuation of provide to CNG’s clients. However, the a part of Ofgem’s security internet that ensures that any funds which home clients have paid into their accounts can be protected, the place they’re in credit score, doesn’t apply within the case of CNG’s business purchasers.

Similarly, whereas home clients of a failed provider are protected by Ofgem’s vitality value cap when switched to a brand new provider, business clients shouldn’t have this certainty.

The standing of CNG clients by way of credit score balances and tariff charges can be decided by their new provider, which can be appointed by Ofgem within the coming days.

CNG clients are being urged to not change earlier than being moved to their new provider. But they need to take meter readings to ease the switch course of when it occurs.

2 November: Further Four Energy Companies Go Bust

In a darkish day for the UK vitality market, 4 extra vitality suppliers have ceased buying and selling, becoming a member of Bluegreen Energy, whose demise was introduced yesterday.

The latest victims of the disaster, attributable to a steep rise in wholesale vitality costs of the previous 12 months, are:

Zebra Power Limited, which provides round 14,800 home clients
Omni Energy, which provides round 6,000 home pre-payment clients
Ampoweruk Ltd, which provides round 600 home clients, and round 2,000 non-domestic clients
MA Energy, which provides round 300 non-domestic clients.

Under Ofgem’s security internet, clients’ vitality provide will proceed and funds that home clients have paid into their accounts can be protected, the place they’re in credit score. Domestic clients can even be protected by the vitality value cap when being switched to a brand new provider.

Customers of those suppliers can be contacted by their new provider, which can be chosen by Ofgem. See story under for additional info on the method of transferring to a brand new provider.

1 November: Bluegreen Energy Becomes Latest Market Casualty

Ofgem, the vitality market regulator, has introduced that Bluegreen Energy Services Limited is ceasing to commerce.

Bluegreen Energy provides round 5,900 home clients and a small variety of non-domestic clients. In an announcement it mentioned: “Due to the energy crisis in the UK, we find ourselves in an unsustainable situation and regrettably, Bluegreen Energy Services Limited is forced to make the difficult decision to cease trading.”

Ofgem’s security internet means clients’ vitality provide will proceed, and funds that home clients have paid into their accounts can be protected, the place they’re in credit score.

Domestic clients will transferred en bloc to a brand new provider, chosen by Ofgem, within the subsequent few days. The new tariff they’re moved to can be priced no greater than the regulator’s value cap, which limits how a lot suppliers can cost for every unit of gasoline and electrical energy used.

The present cap works out at £1,277 a yr for a typical family with common consumption. The means the cap is ready is below shut scrutiny at current, with vitality suppliers saying it obliges them to function at a loss as a result of wholesale vitality costs are so excessive. But any improve within the cap when it’s subsequent reviewed early in 2022 will heap strain on already-stretched family budgets.

Last week Ofgem introduced a session course of on the construction and operation of the cap.

Ofgem’s recommendation to Bluegreen Energy clients is to not change provider for the second. It says they need to:

wait till a brand new provider has been appointed and you’ve got been contacted by them within the following weeks earlier than seeking to change to a different vitality provider
take a meter studying prepared for when your new provider contacts you as this may make the method of transferring clients over to the chosen provider, and honouring any funds that home clients have paid into their accounts, the place they’re in credit score, as clean as doable.

21 October: Shell Energy Takes On GOTO, Pure Planet, Daligas and Colorado Customers

Ofgem, the vitality market regulator, has appointed Shell Energy Retail to tackle the purchasers of failed vitality corporations GOTO, Pure Planet, Daligas and Colorado Energy.

The transfer impacts a mixed complete of roughly 275,000 home clients and 600 non-domestic clients.

As with different buyer transfers (see tales under), any credit score balances that home clients have paid into their accounts can be protected, and there can be no interruption to produce.

Domestic clients can be moved onto a Shell Energy tariff that’s restricted by Ofgem’s vitality value cap, which presently stands at £1,277 a yr for households utilizing a median quantity of vitality. Once the switch is accomplished, clients are free to change with out penalty. However, due to present market circumstances arising from the excessive value of wholesale pure gasoline, it’s unlikely that offers can be available under the extent of the cap till early 2022.

Customers of all three suppliers can be contacted over the approaching days concerning the modifications. Ofgem says they need to anticipate Shell Energy to get in contact and shouldn’t change within the meantime.

18 October: GOTO Energy Latest Casualty In Energy Price Crisis

GOTO Energy Limited is ceasing to commerce with quick impact. The agency provides gasoline and electrical energy to 22,000 home clients. It is the thirteenth provider to go bust since September because the UK market reels from the results of rocketing wholesale vitality costs.

Under the security internet provisions overseen by the vitality regulator, Ofgem, clients’ vitality provide will proceed with out interruption. Funds that home clients have paid into their accounts can be protected, the place they’re in credit score.

Domestic clients can be switched as a block to a brand new provider by Ofgem. The new tariff they’re given can be protected by Ofgem’s vitality value cap, which stands at £1,277 a yr for households with typical consumption. The measurement of payments will at all times be decided by the quantity of vitality consumed.

Tariffs working throughout the cap are presently the most affordable in the marketplace due to the unprecedented value of wholesale vitality on worldwide markets. However, clients are free to change away from the brand new provider, with out penalty, in the event that they select to take action.

Ofgem’s recommendation to affected clients within the meantime is to:

wait till a brand new provider has been appointed and you’ve got been contacted by them within the following weeks earlier than seeking to change to a different vitality provider
take a meter studying prepared for when your new provider contacts you. This will make the method of transferring clients over to the chosen provider, and honouring any funds that home clients have paid into their accounts, the place they’re in credit score, as clean as doable.

14 October: Daligas Closure Brings Number Of Recent Failed Firms To 12

Daligas Limited has introduced it’s ceasing to commerce. The announcement comes the day after Pure Planet and Colorado Energy closed their doorways, leaving 250,000 home clients to depend on the regulator Ofgem’s security internet (see story under).

The failure of Daligas means 12 vitality suppliers have collapsed for the reason that starting of September. They have all been hit by the excessive cost of vitality – significantly pure gasoline – on wholesale markets.

With 9,000 home and business clients, Daligas Limited, a gas-only provide agency, is among the smaller businesses within the sector, however the announcement at this time can be seen as additional proof of the turbulence affecting the UK vitality market as an entire.

In order to run low-cost tariffs when wholesale costs are rising quickly, firms have to have purchased substantial shares at reasonably priced costs – a course of generally known as hedging. Many smaller corporations with modest capital assets haven’t been in a position to safe long-term provides, and have discovered present spot costs out of their attain.

Additionally, the Ofgem value cap on how a lot corporations can cost these on their variable charge ‘default’ tariffs means corporations can not cross on the complete cost of wholesale vitality purchased at this time to their clients.

As with earlier company failures, Daligas’ home clients’ provide can be assured by Ofgem, together with any credit score balances, till a brand new provider is discovered to tackle their business. An announcement relating to the brand new provider could also be made within the coming days, though stories recommend the remaining viable suppliers are rising more and more cautious of taking over new clients en bloc provided that they must service them at a loss.

If Ofgem is unable to safe a ‘supplier of last resort’ to soak up the purchasers of a failed firm, it has the ability to nominate a particular administrator to run the failed business till such time as a everlasting substitute might be discovered.

The prices related to transferring clients to a brand new provider are mentioned to run into a whole lot of kilos per account – a cost that might finally filter by way of to all vitality payments through expenses levied on the surviving suppliers.

The regulator says clients of all failed corporations, together with Daligas, ought to sit tight and never change however as a substitute wait till they hear from their new provider. They ought to, nonetheless, take a meter studying as quickly as doable to supply to the brand new provider sooner or later.

13 Oct: Pure Planet, Colorado Energy Latest Firms To Cease Trading

Pure Planet Limited and Colorado Energy Limited have introduced they’re ceasing to commerce. Pure Planet provides gasoline and electrical energy to round 235,000 home clients and Colorado Energy provides gasoline and electrical energy to round 15,000 home clients.

They convey to 11 the entire of vitality corporations which have gone bust for the reason that starting of September on account of the pressures arising from hovering wholesale costs (see tales under).

The market regulator, Ofgem, operates a security internet to make sure clients’ vitality provide will proceed and any credit score in clients’ accounts can be protected. Domestic clients with the corporations can be moved en masse to new suppliers by Ofgem, the place they are going to be protected by the vitality value cap, which presently stands at £1,277 a yr for typical consumption twin gas households on normal variable charge default tariffs.

Customers can be contacted by their new provider, which can be chosen by Ofgem over the approaching days.

Ofgem’s recommendation to these affected is to:

take meter readings as quickly as doable prepared for when your new provider contacts you (this may make the method of transferring clients over to the chosen provider, and honouring any funds that home clients have paid into their accounts, the place they’re in credit score, as clean as doable)
wait till a brand new provider has been appointed and you’ve got been contacted by them within the following weeks earlier than seeking to change to a different vitality provider.

Ofgem says it’s working intently with authorities and business to ensure clients proceed to be protected this winter. Neil Lawrence, Director of Retail at Ofgem, mentioned: “Our primary precedence is to guard clients. We know it is a worrying time for many individuals and information of a provider going out of business might be unsettling.

“I need to reassure affected clients that they don’t want to fret. Under our security internet we’ll be certain that your vitality provides proceed. If you will have credit score in your account the funds you will have paid in are protected and you’ll not lose the money that’s owed to you.

“Ofgem will choose a new supplier for you and while we are doing this our advice is to wait until we appoint a new supplier and do not switch in the meantime. 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 tariff.”

Customers who’ve questions ought to go to the FAQs on the Ofgem website.

4 Oct: E.ON Next Takes On Enstroga, Igloo, Symbio Customers

Ofgem, the vitality market regulator, has appointed main provider E.ON Next to tackle the purchasers of Enstroga, Igloo Energy and Symbio Energy, which introduced final week that they have been ceasing to commerce (see under). The transfer swells E.ON Next’s buyer roll by 233,000 households.

The change, introduced at this time, is efficient from yesterday. Ofgem ensures that there can be no interruption to produce, as is at all times the case when clients are transferred to a brand new provider. Any account credit score balances are additionally protected. The regulator urges clients to not change till the switch course of is full.

Transferring clients can be protected by the vitality value cap, which rose to £1,277 every year on Friday for normal variable charge ‘default’ tariff clients utilizing a typical quantity of vitality. Many ENSTROGA, Igloo Energy and Symbio Energy clients will subsequently see a rise of their payments if they’ve beforehand have been on a less expensive fastened charge deal.

However, the present vitality market disaster (see under) means these cheaper offers have been withdrawn from sale, leaving default tariffs ruled by the cap because the lowest-priced available typically.

That mentioned, transferred clients are free to buy round and change as soon as their transfer to E.ON Next is finalised. Customers won’t be charged exit charges in the event that they resolve to change to a different provider at the moment.

Anyone whose change was already in progress when their authentic provider went out of business can have their change honoured.

Further info might be discovered on E.ON Next’s web site:

29 Sept: Three More Energy Firms Cease To Trade

Ofgem, the vitality regulator, has introduced that three extra vitality suppliers are ceasing to commerce. This means 9 corporations have closed their doorways in recent weeks in response to hovering wholesale vitality costs, which meant they have been successfully working at a loss (see tales under).

Today’s announcement lists Igloo Energy (179,000 home clients) Symbio Energy (48,000) and ENSTROGA (6,000) because the latest failures. Ofgem says that collectively they signify lower than 1% of home clients in the market. In complete, approaching two million households have been affected by recent collapses.

Under Ofgem’s security internet, clients of the failed corporations will proceed to obtain gasoline and electrical energy with out interruption and any credit score steadiness in buyer accounts can be protected and honoured when a brand new provider is appointed for every firm.

Domestic clients of every agency can be moved en bloc to their respective new provider’s deemed tariff. This can be topic to Ofgem’s value cap, which stands at £1,277 (as of 1 October) for households with typical utilization.

The new suppliers will contact clients with extra info sooner or later. Ofgem usually appoints ‘suppliers of last resort’ inside a matter of days. No motion is required by clients within the meantime past taking a meter studying as quickly as doable. There is not any want to change suppliers. This will change into an possibility as soon as the switch to the brand new provider is finalised.

Neil Lawrence at Ofgem mentioned: “Our primary precedence is to guard clients. We know it is a worrying time for many individuals and information of a provider going out of business might be unsettling.

“I need to reassure clients of ENSTROGA, Igloo Energy and Symbio Energy that they don’t want to fret. Under our security internet we’ll be certain that your vitality provides proceed. If you will have credit score in your ENSTROGA, Igloo Energy or Symbio Energy account the funds you will have paid in are protected and you’ll not lose the money that’s owed to you.

“Ofgem will select a brand new provider for you and whereas we’re doing this our recommendation is to attend till we appoint a brand new provider and don’t change within the meantime. You can depend on your vitality provide as regular. We will update you when we’ve chosen a brand new provider, who will then get in contact about your tariff.

“In recent weeks there has been an unprecedented increase in global gas prices which is putting financial pressure on suppliers. Ofgem is working closely with government and industry to make sure customers continue to be protected this winter.”

UPDATE 27 September: Shell Energy Takes On Green Supplier Customers

Customers of failed vitality firm Green Supplier will now be serviced by Shell Energy, the vitality regulator Ofgem has introduced. The switch of 255,000 home clients and a small variety of non-domestic clients turns into efficient instantly, and Shell Energy will contact these involved over the approaching days and weeks.

Ofgem mentioned yesterday that Octopus has taken on clients of Avro Energy, which introduced final week that it was ceasing to commerce. Other firms to announce their closures in recent weeks embrace PfP Energy, CashPlus Energy, People’s Energy and Utility Point (see tales under).

As additionally detailed under, Ofgem’s security internet procedures guarantee continuity of provide and safeguard credit score balances whereas the switch of accounts takes place.

Customers of failed firms can be moved to ‘deemed’ contracts with their new provider, with costs managed by the Ofgem value cap.

Green Supplier clients can contact Shell Energy for extra info: 0330 094 5804 or at [email protected].

Further firm closures are anticipated as suppliers wrestle to fulfill the rising cost of vitality on wholesale markets, with the vitality cap limiting how a lot of this extra cost they’ll cross on to their clients.

The authorities and Ofgem have issued statements reassuring shoppers that there isn’t any menace to produce within the UK over the winter months.

26 September: Ofgem Appoints Octopus To Take On Avro Customers

Energy market regulator Ofgem has appointed Octopus Energy to tackle the 580,000 home clients of Avro Energy, which introduced that it’s ceasing to commerce final week. The transfer takes impact from at this time (26 September).

Green Supplier Limited additionally introduced final week that it’s ceasing to commerce. An announcement is anticipated within the subsequent few days about which firm will tackle its 255,000 clients below Ofgem’s ‘safety net’ course of.

This ensures that clients of any failed vitality firm won’t see any interruption to produce whereas their account is transferred to the brand new firm, generally known as the ‘supplier of last resort’. Any credit score steadiness can be safe-guarded.

Octopus will contact Avro clients over the approaching days to supply info on the change-over. Customers can be moved to a ‘deemed’ contract which can have a most value per unit of vitality in step with the Ofgem value cap.

On 1 October, this strikes to £1,277 a yr for a family with typical consumption ranges, a rise of 12%. With many cheaper fastened offers having been withdrawn from the market, that is more likely to signify good worth at current, though many Avro clients will inevitably discover themselves paying greater than beforehand.

Once the transfer to Octopus is full, Avro clients are free to change to a different deal.

Ofgem says there isn’t any want for Avro clients to cancel any direct debits they’ve with the agency. It says: “You don’t need to cancel your direct debit, but can if you wish to. Octopus Energy will be in touch with you about whether your existing direct debit will remain in place, or whether they will set up a new direct debit.”

More info might be discovered at www.octopus.energy/avro and on the Ofgem website.

24 September 2021: Govt Issues FAQs To Calm Fears Over Energy Market

The authorities has taken the bizarre step of publishing a Q&A to allow shoppers “to find out more about energy prices and energy suppliers.”

At Forbes Advisor, we’ve addressed these points on this web page and elsewhere, overlaying necessary points such because the default tariff value cap and the security internet which ensures continuity of provide to clients of failed vitality suppliers.

But we thought it might be attention-grabbing so that you can learn the government’s own views on such matters, as printed at this time…

I’m frightened there’s not sufficient gasoline?

You don’t should be. While international wholesale gasoline costs are presently excessive we’re assured that the UK’s safety of vitality provide is safe now and over the winter.

Am I going to be left with out energy if my provider goes bust, or do I’ve to discover a new provider myself?

No you don’t. Even in case your provider stops working, Ofgem – the unbiased vitality regulator – will mechanically change you onto a brand new provider so there can be no interruption to your provide of vitality.

It isn’t uncommon for vitality suppliers to exit the market so there’s a well-rehearsed system in place to guard households and guarantee your gasoline and electrical energy retains operating.

If I be part of a brand new provider, aren’t my vitality payments going to extend?

Customers of failed suppliers who’re switched to a brand new provider are protected by the Energy Price Cap.

This is a authorities scheme which protects thousands and thousands of individuals from sudden will increase in international gasoline costs and limits the quantity an vitality provider can cost these on default or normal variable charges.

Suppliers can not cost clients of failed suppliers greater than the extent of the value cap.

Major vitality suppliers additionally buy a lot of their wholesale provides many months prematurely, giving safety to them and their clients from short-term value spikes.

We even have quite a few different schemes available to assist vulnerable and low-income households together with the Warm Home Discount, Winter Fuel Payments and Cold Weather Payments.

Is the Energy Price Cap going to massively improve this winter?

The Energy Price Cap is reviewed twice a yr based mostly on the latest estimated prices of supplying vitality and it was introduced in the summertime that from 1 October, the cap would rise resulting from greater wholesale gasoline costs.

However, the following time the value cap is because of be up to date is April 2022 which suggests clients who it protects needn’t fear about it growing earlier than then.

Why don’t we retailer extra gasoline within the UK?

Gas storage capability has little bearing on the value of gasoline. Some different international locations do retailer gasoline to make sure their very own safety of provide, however the UK advantages from having access to a extremely various and safe sources of gasoline from the North Sea and dependable import companions like Norway.

22 September 2021: Ofgem Chases Suppliers For Renewables Payments

The vitality market watchdog, Ofgem, has ordered 5 small suppliers to pay round £765,000 they owe a authorities renewables scheme. Many vitality suppliers’ funds are stretched almost to breaking level by rocketing wholesale vitality costs.

Colorado Energy, Igloo, Neon Reef, Whoop Energy and Symbio Energy have did not pay into the Feed In Tariff (FIT) scheme which offers funds to homeowners of small-scale renewable vitality mills.

FIT is designed to advertise the uptake of smaller scale renewable and low-carbon electrical energy era. Suppliers are obliged to pay into the scheme as a situation of their provide licences, and so the regulator, which administers the FIT scheme, is demanding they every pay their dues.

The deadline for funds was September 17. Colorado Energy nonetheless 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 the missed funds will delay onward funds to renewable vitality mills. It has warned the 5 suppliers that if funds aren’t made, it might take enforcement motion that would embrace stripping them of their licences or imposing monetary penalties.

Extra strain

The Ofgem calls for will heap further strain on the funds of the businesses involved at a time when the fragility of some vitality suppliers’ capital assets has been uncovered by rising wholesale costs. Six smaller suppliers have collapsed in recent weeks, with Avro Energy and Green Supplier Limited at this time changing into the fifth and sixth suppliers to fold of late, affecting over 800,000 clients (see story under).

The different 4 suppliers to cease buying and selling just lately (PfP Energy, CashPlus Energy, People’s Energy and Utility Point), had round 600,000 clients on their books.

Affected clients’ accounts are being transplanted into one of many UK’s main vitality suppliers as a part of Ofgem’s ‘safety net’ course of that ensures provides to individuals’s properties aren’t reduce off and credit score balances are protected.

Ofgem appointed EDF Energy to tackle 220,000 Utility Point clients and British Gas to do the identical for People’s Energy clients.

Amid rising fears of additional provider collapses, business secretary Kwasi Kwarteng MP advised Parliament final week that it might not subsidise ailing vitality corporations.

He mentioned: “The government will not be bailing out failed companies. There will be no rewards for failure or mismanagement. The taxpayer should not be expected to prop-up companies who have poor business models and are not resilient to fluctuations in price.”

Kwarteng additionally mentioned solutions of a return to Seventies-style blackouts and three-day working weeks have been alarmist and unhelpful.

Avro Energy, Green Supplier Ltd Latest Energy Suppliers To Cease Trading

Avro Energy and Green Supplier Limited have ceased to commerce, the fifth and sixth vitality suppliers to shut their doorways in little over every week.

Avro Energy provides gasoline and electrical energy to round 580,000 home clients whereas Green Supplier Limited provides gasoline and electrical energy to round 255,000 home clients and a small variety of non-domestic clients.

Together they account for just below 3% of home clients available in the market.

Ofgem’s security internet will guarantee there isn’t any interruption to the vitality provide of shoppers of the corporations, and excellent credit score balances (of home clients) can be protected.

Domestic clients can even be protected by the vitality value cap when switched to a brand new provider as a part of the regulator’s course of in such conditions.

Ofgem’s recommendation to Avro Energy and Green Supplier Limited clients is to:

Wait till a brand new provider has been appointed and you’ve got been contacted by them within the following weeks earlier than seeking to change to a different vitality provider.
Take a meter studying prepared for when your new provider contacts you (if you happen to can, take {a photograph} of your meter, or no less than jot down the numbers together with at this time’s date).

This will make the method of transferring clients over to the chosen provider, and paying again any excellent credit score balances, as clean as doable.

Govt Acts On CO2 Shortage As Energy Crisis Intensifies

The taxpayer is to fund the operations of a US-owned fertiliser producer that has mothballed two UK vegetation due to hovering vitality costs.

The transfer comes as the federal government grapples with the deepening vitality disaster which has pushed quite a few suppliers into chapter 11 and threatened thousands and thousands of shoppers and businesses with greater vitality payments. But it has dominated out state backing for vitality suppliers going through insolvency and closure.

Four vitality firms have ceased buying and selling in recent days, with extra anticipated to observe. Customers of the failed suppliers are mechanically transferred to a brand new provider, with out lack of provide and with credit score balances protected, due to a ‘safety net’ operated by vitality market regulator, Ofgem.

The authorities’s three-week cope with CF Fertilisers, introduced by Kwasi Kwarteng MP, business secretary, will safe provides of CO2, which is a by-product of its manufacturing course of.

CF Fertilisers produces round 60% of the UK’s CO2, which is used within the slaughter of animals akin to poultry and pigs, in meals packaging and within the manufacturing of carbonated drinks, and has many purposes throughout business, together with within the well being and nuclear sectors.

Under the phrases of the deal, the federal government will present “limited financial support” for CF Fertilisers’ working prices at its Teesside plant for 3 weeks “while the CO2 market adapts to global gas prices”.

“Sufficient capacity”

Mr Kwarteng had earlier made an handle to Parliament by which he mentioned: “We have ample capability and greater than ample capability to fulfill demand, and we don’t anticipate provide emergencies to happen this winter.

“There is absolutely no question of the lights going out, or people being unable to heat their homes. There’ll be no three-day working weeks, or a throw-back to the 1970s. Such thinking is alarmist, unhelpful and completely misguided.”

He pressured, nonetheless, that the federal government won’t pump money into vitality suppliers to maintain them afloat: “The government will not be bailing out failed companies. There will be no rewards for failure or mismanagement. The taxpayer should not be expected to prop-up companies who have poor business models and are not resilient to fluctuations in price.”

As properly as stressing the deserves of the Ofgem security internet, Mr Kwarteng mentioned the regulator’s vitality value cap “isn’t going anywhere” and would stay in place to guard clients from “price spikes”.

The cap applies to default normal variable charge and prepayment tariffs and advantages round 15 million households. Such tariffs have traditionally been among the many costliest in the marketplace however growing wholesale costs imply hitherto cheaper fastened charge offers have been withdrawn from the market in lots of cases.

The latest iteration of the Ofgem value cap comes into impact on 1 October and can stay in place till 31 March 2022. The internet impact of the cap is to isolate the tariffs involved from additional will increase within the wholesale cost of vitality.

This means many suppliers can be promoting gasoline and electrical energy to shoppers at lower than cost value, which is why extra provider failures are anticipated.

The cap is anticipated to rise steeply when the following adjustment is made in April subsequent yr. The new stage can be introduced in February and can mirror wholesale costs within the second half of 2021.

Mr Kwarteng insists that the discount within the variety of suppliers shouldn’t lead to a discount in competitors: “We must not see a return to the ‘cosy oligopoly’ of years past, where a few large suppliers simply dictated to customers conditions and pricing.”

For extra info on how to reply to the vitality disaster, see our tales under.

Energy Crisis – What Should You Do?

As the federal government holds emergency conferences with the vitality sector and commentators predict additional failures of small and medium suppliers, these are worrying occasions for purchasers. So what, if something, do you have to be doing?

Your plan of action will largely rely in your present vitality preparations. Here’s the solutions to some widespread questions that will help you make sure you’re getting one of the best worth doable in a turbulent and troubled market.

First, discover out what tariff you might be on

If you’re unsure what tariff you will have, and even who your provider is, dig out a recent invoice (or payments, when you have separate suppliers for electrical energy and gasoline). Here you will see that all the knowledge you want about your vitality agency or corporations, together with particulars of your tariff(s).

Are you on a default normal variable charge tariff (SVT)?

If you’ve by no means switched provider or haven’t completed so for greater than a few years, you might be more likely to be on a default (SVT) deal – round 11 million households within the UK have certainly one of these tariffs, the place the value you pay might be adjusted by your provider at any level, supplied it offers you 30 days’ discover of any improve.

Prior to the present pricing crunch, these open-ended default offers have been among the many costliest in the marketplace, and the recommendation was at all times to change to a less expensive fixed-rate, fixed-term contract – there have been normally dozens available.

But that has modified. At current, default offers are among the many best. You can nonetheless run an vitality quote to see if there’s something cheaper available, however it’s probably that your finest guess can be to sit down tight and anticipate costs to scale back.

Default deal? Your costs will rise in October, however you might nonetheless be on the most suitable choice

Maximum default tariff costs are ruled by a cap managed by Ofgem, the vitality market regulator. This is adjusted every April and October, and subsequent month it is going to improve by 12% to £1,277 for typical consumption households, and suppliers are growing their costs to take full benefit.

That improve is a scary quantity – however such is the disaster within the wholesale vitality market, default offers are nonetheless more likely to be among the many finest worth of these available.

Are you on a prepayment meter?

Prepay tariffs – round 4 million UK properties have one – are additionally topic to an Ofgem cap. This will rise by £153 to £1,309 on 1 October (once more for these with common consumption ranges).

Checking to see if there’s a less expensive deal is at all times a good suggestion, however as with default tariffs, chances are you’ll discover you’re on a aggressive plan, even after the upcoming value rise.

Are you on a fixed-rate tariff?

Some 13 million UK properties are on fastened charge tariffs, the place the value per unit of vitality used is locked in for a selected interval, normally 12 or 24 months.

Traditionally, these have supplied one of the best worth, with costs usually a whole lot of kilos under the Ofgem value cap – and assured to not change, no matter what occurs within the wider market. But over the previous week or so, fastened tariff charges have rocketed, and lots of firms have stopped providing them to new clients.

If you’re on a repair already, it’s almost sure that your finest guess is to remain put till it ends. At this level, if you happen to do nothing, you’ll transfer to your provider’s default variable charge tariff. But as your tariff finish date approaches, you possibly can run a quote to see if there’s one other, cheaper repair to which you’ll transfer (if you happen to change inside six weeks of your tariff ending date, you gained’t pay any exit charges in case your present deal levies them).

It may match out that the default deal represents good worth on the time – or you possibly can ask your present provider if they’ve one other tariff that might cost you much less.

Remember, you possibly can change from a variable charge deal at any level with out penalty, so if you happen to transfer to at least one, you possibly can change away ought to a less expensive deal change into available elsewhere.

Are you on a non-default variable charge tariff?

A comparatively small variety of households are on ‘elected’ variable charge offers that, till just lately, have been priced under the extent of costly default variable charge choices. In reality, they have been on a par and even cheaper than fixed-rate presents.

However, costs for these aggressive variable charge tariffs have elevated and lots of have been withdrawn from the marketplace for new clients. So if you’re on certainly one of these plans, it’s best to discuss to your provider to examine it doesn’t have a less expensive possibility.

If that doesn’t work, it’s best to run an vitality quote to see if there’s a higher deal on the market – together with amongst normal variable charge offers.

Are you frightened your vitality provider would possibly go bust?

We’re listening to plenty of hypothesis within the press {that a} clutch of smaller to medium-sized vitality suppliers might go bust within the coming days and weeks if the federal government doesn’t step in with a radical assist package deal.

The necessary factor to recollect is that Ofgem, the regulator, has continuity of provide as its precedence, so it is going to work to make sure that clients of any firm that goes to the wall are transferred to a different provider – that is the so-called ‘safety net’ that ensures clients usually are not left with out energy.

Again, the federal government says it’s exploring methods to make the security internet as strong as doable. This might contain advancing state-backed loans to encourage corporations to tackle clients from failed suppliers.

If you might be involved about your vitality provider’s viability, switching to a different agency will not be one of the best plan of action at current. First, chances are you’ll not be capable of discover a cheap tariff to maneuver to, and second, your pursuits will at all times be guarded by the security internet.

That’s to not minimise the nervousness that such conditions can result in – listening to that your provider has gone bust will at all times be a shock. But it needs to be of consolation to know {that a} system is in place to ensure any unfavourable influence is saved to an absolute minimal.

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Ofgem Appoints EDF Re Utility Point, British Gas Re People’s Energy

Energy market regulator Ofgem has appointed massive vitality provider EDF to tackle the 220,000 home clients of Utility Point and organized for British Gas to do the identical for People’s Energy after the 2 smaller corporations ceased buying and selling final week (see story under).

Whenever an vitality firm ceases buying and selling, Ofgem’s security internet protocols take impact to make sure clients’ vitality provide isn’t interrupted and any credit score balances held with the corporate are protected. Part of the method contains appointing a ‘supplier of last resort’, in these cases EDF and British Gas, following a aggressive bidding spherical amongst suppliers.

The transfer comes as the broader vitality market experiences unprecedented turmoil resulting from hovering pure gasoline and electrical energy costs on wholesale markets (see story under). Many suppliers are ceasing to market merchandise to new clients as a result of costs are so excessive. In many circumstances, the most affordable offers on supply are default normal variable charge tariffs, which traditionally have been among the many costliest in the marketplace.

The quantity suppliers can cost clients on default tariffs is proscribed by Ofgem’s value cap. This is rising by 12% to £1,277 every year for a family with medium consumption on 1 October 2021. The improve was calculated in the summertime earlier than the present pricing disaster took full maintain of worldwide vitality bourses, and is now reckoned to be far under what vitality firms are paying for wholesale provides (see story under).

There are fears that this may squeeze smaller suppliers with decrease capital assets, resulting in extra company failures, a consolidation of the market into the arms of bigger suppliers, and in the end a discount in competitors.

Ofgem can be more likely to improve its cap by a big quantity on the subsequent alternative in April 2022, probably sending it above £1,550 a yr for typical customers.

The authorities is reported to be holding disaster talks with vitality market representatives this weekend to make sure continuity of provide to properties and businesses.

Customer recommendation

Ofgem’s recommendation to Utility Point and People’s Energy clients is to attend for EDF or British Gas to contact them over the approaching days with personalised details about their new ‘deemed’ tariff. Traditionally, ‘deemed’ tariffs have been dearer than others available from the identical firm or from the broader market, however except wholesale market costs decline sharply, this will not be the case.

However, as soon as their new account with their new provider is ready up, clients of the 2 failed corporations are free to seek for a less expensive vitality deal in the event that they so select.

Ofgem mentioned: “If customers wish to change their tariff or switch supplier, they should ask to be switched to another tariff, or shop around. You won’t be charged any exit fees. Waiting for them (EDF or British Gas) to contact you will be the smoothest way for any credit balances domestic customers had with Utility Point/People’s Energy to be honoured by EDF/British Gas.”

With regard to clients who pay by direct debit, Ofgem mentioned: “You don’t need to cancel your direct debit, but can if you wish to. EDF/British Gas will be in touch with you about whether your existing direct debit will remain in place, or whether they will set up a new direct debit.”

Utility Point clients with sensible meters have been advised: “Some customers with newer models of smart meter should see no loss in smart functionality. Unfortunately, customers with older smart meter models will see a loss of smart functionality, but their supplies will continue uninterrupted. EDF will upgrade these older meters for any customers who request it. Once the transfer to EDF is complete, they will take steps to restore smart functionality.”

Utility Point clients with additional queries are requested to visit the EDF website or telephone: 0333 009 7120.

People’s Energy clients ought to visit the British Gas website or name: 0333 202 1052 (if they’ve a credit score meter, the place they pay month-to-month or quarterly in arrears) or: 0333 202 9742 (if they’ve a pay-as-you-go meter.

16 September 2021: What’s Happening To UK Energy Prices?

These are turbulent occasions for the UK vitality market – and the turmoil will inevitably be mirrored in greater home vitality payments. Here’s a rundown of what’s occurring, the way it would possibly have an effect on you, and what motion you possibly can take…

Wholesale costs are rising…

And they’re rising to report ranges. Energy firms naturally search to cross their greater prices onto their clients, so what occurs on the wholesale markets in the end impacts home and business clients.

Why ‘sooner or later’?

How and while you’ll see the influence will depend upon what kind of vitality tariff you will have, and the way your provider buys its wholesale provides…

Variable charge tariff clients The cost of a variable charge tariff can fluctuate at any time, though your provider should offer you 30 days’ discover of a value improve. So value rises listed here are more likely to be on the ‘sooner’ finish of the spectrum
What concerning the value cap? The vitality value cap, administered by the market regulator, Ofgem, solely applies to straightforward variable charge default tariffs (extra on this under). If you might be on a provider’s non-default variable charge deal, costs might rise past the cap stage.
Fixed charge, fastened time period tariff clients Fixed offers actually come into their very own when costs are rising as a result of, because it says on the tin, the costs are locked in for a acknowledged time period. No matter what occurs on the wholesale markets, the value you pay for every unit of vitality you utilize will stay the identical, till the contract ends.
But when the repair ends – what then? That’s the ‘later’ finish of the spectrum – however even right here, some can be affected ahead of others. Recent weeks have seen the everyday cost of fixes hovering ever greater, so anybody coming to the tip of a tariff’s lifespan might discover themselves paying much more for his or her subsequent fastened contract. They might even discover that variable charge offers are cheaper. Further down the road, fastened tariffs will stay costly relative to costs within the first half of 2021.

What concerning the value cap?

Ofgem’s cap limits the quantity firms can cost their default tariff clients – about 11 million households within the UK. This cap is rising by roughly 12% on 1 October to permit suppliers to cost extra due to rising wholesale costs.

If the cap is rising, gained’t that kind issues out?

Sadly, no. Ofgem did its sums based mostly on what was occurring to wholesale costs over the summer season, and what it thought would possibly occur over the autumn and winter. It seems it underestimated the velocity and scale of will increase.

The new cap was calculated utilizing a gasoline value of £63 per therm – it’s been as excessive as £177 per therm in recent days, with a 12-month ‘forward price’ (what you pay if you happen to commit to purchasing a yr prematurely) of as much as £135 per therm.

With electrical energy, the price-per-therm utilized by Ofgem was £70, nevertheless it has hit £181 and has been buying and selling at £140 for 12 months.

What appears sure is that the following overview of the cap in February (to take impact in April) will see one other leap upwards, with Ofgem probably erring on the facet of warning at that time and feeding in a meaty improve.

How will suppliers cope?

Some gained’t. As you possibly can learn within the tales under, 4 vitality suppliers have gone bust up to now few days, and extra are more likely to go to the wall within the coming weeks and months.

But as we additionally clarify, no-one can be left with out provide. Ofgem’s security internet means clients are transferred to a different provider mechanically.

But why are wholesale costs growing a lot?

Rising demand Last winter was significantly chilly throughout Europe, and extra businesses are re-opening within the wake of the coronavirus financial slowdown.
Lack of wind We are more and more utilizing renewable sources of vitality akin to wind, photo voltaic and wave to generate electrical energy, however recent weeks have seen unseasonably calm climate, that means wind farms haven’t produced as a lot vitality as anticipated. This is pushing up the value of conventional fuels akin to pure gasoline, in addition to electrical energy itself.
Anti-coal sentiment As the recognition of renewables has risen, the UK has mothballed or decommissioned coal-powered producing vegetation. In some circumstances these might be introduced again on-line, however it may be a prolonged course of, and there could also be points in acquiring the provision of coal (which is able to itself improve in value).
Supply interruption This week noticed an electrical energy provide cable between France and England broken by fireplace, lowering the quantity we will import from the Continent (the UK is a internet importer of electrical energy).

What can shoppers do?

Such is the disaster within the home market for the time being that almost all suppliers have withdrawn most or all of their offers – they merely can not afford to tackle new clients. But we will anticipate extra offers to come back onto the market as soon as wholesale costs settle – as they’re more likely to do as soon as provide points are resolved.

If you’re on a set charge tariff with an excellent few months left to run, it’s in all probability finest to sit down tight and see what the market circumstances are as you method the tip of your time period.

If your repair is nearing its finish, hold checking the market to see if you happen to can spot an inexpensive deal. And discuss to your present supplier to see what they’ll supply, both so far as a substitute repair is anxious, or relating to their default tariff. As famous earlier, the default might even show the higher guess at current.

If you’re on a variable tariff, it’s as soon as once more a case of anticipating aggressive offers, both from the market choice or out of your current provider.

14 September 2021: People’s Energy and Utility Point Cease Trading, Customers Urged To Sit Tight

Two extra smaller vitality firms – People’s Energy and Utility Point – have ceased buying and selling as of at this time, confirming the crippling impact of hovering wholesale costs on the UK vitality market. Last week, PFP Energy and CashPlus Energy additionally closed their doorways (see under).

Market commentators say rising prices will lead to extra casualties amongst vitality corporations this winter. You can discover out right here what occurs in case your vitality provider goes bust.

The market regulator, Ofgem, is advising the estimated 500,000 clients of People’s Energy and Utility Point to not take any motion till it has appointed a brand new provider. The affected households won’t undergo any interruption to produce and any credit score balances will stay in place.

Once the brand new provider is appointed, clients can be free to change to a different supplier in the event that they so select.

On its web site, People’s Energy mentioned: “We are saddened to tell you that People’s Energy is ceasing to commerce. Please relaxation assured that your vitality provide is safe and all home members’ account credit score balances are protected. This contains any recent top-ups that have been made as a part of the seasonal weighting initiative.

“Ofgem, the energy regulator, will be appointing a new supplier for all our members. Their advice is not to switch, but to wait until they appoint a new supplier. This will reduce any risk of disruption in supply and facilitate the transfer of, and access to, domestic customers’ credit balances.”

Utility Point mentioned: “It is with remorse that we should announce that Utility Point is ceasing to commerce. Customers needn’t fear, their provides are safe and home credit score balances are protected.

“Ofgem’s advice is not to switch, but to wait until they appoint a new supplier for you and also a to take a meter reading ready for when your new supplier contacts you. This will help make sure that the process of handing customers over to a new supplier, and honouring domestic customers’ credit balances, is as hassle free as possible for customers.”

8 September 2021: Energy Firms Close As Market Reels From Rising Costs

Two of the UK’s smaller vitality suppliers – PfP Energy and CashPlus Energy – have ceased buying and selling. The estimated 90,000 to 100,000 affected households can have their pursuits protected by the security internet operated by the market regulator, Ofgem.

Escalating wholesale gasoline and electrical energy costs are reported to be the basis trigger of those collapses. There are fears different suppliers might shut over the winter if scarcity of gas provides within the face of rising demand forces costs ever greater.

Green Network Energy, Simplicity Energy and Tonik Energy are among the many suppliers who’ve gone bust up to now 12 months.

Whenever a agency is in monetary issue, its scenario is intently monitored by Ofgem. If closure turns into inevitable, the regulator finds an alternate provider to take over the ailing agency’s clients, sustaining provide with out interruption.

Customers usually are not required to take any motion as Ofgem works with the corporations involved to honour credit score balances and handle debt repayments.

However, clients who’re moved to a brand new provider will discover themselves on a ‘deemed’ contract that’s more likely to be comparatively costly. It is at this level they need to run an vitality tariff comparability to see if they’ll change to a less expensive various – which they’re at liberty to do.

You can discover out extra about what occurs when an vitality provider goes bust in Rachel’s article.

Evidence of the influence of rising wholesale costs got here in August when Ofgem introduced a steep improve in its value cap to permit firms to cost their normal variable charge ‘default’ tariff (SVT) clients extra due to rising prices.

The £139 hike will take the cap to £1,277 for a family with typical consumption when it comes into impact on 1 October – its highest ever stage because it was launched in 2019. All the key suppliers have introduced will increase of their costs to match the upper cap (see under).

The cap is modified twice a yr, in April and October. The expectation is that Ofgem will improve it additional in April 2022 if there isn’t any cooling in wholesale value inflation.

You can discover out extra about Ofgem’s value cap right here.

Around 11 million households are on SVTs. The most important alternate options are non-standard variable charge offers and fixed-term, fixed-rate offers, the place the value per unit of vitality used is fastened for a acknowledged interval, normally 12 or 24 months.

The value of those offers can be growing, and a few corporations are providing fixed-rate contracts at the next value than their SVTs. An efficient approach to discover out whether or not it can save you money by switching tariff and/or supplier is to run a citation on our web site.

Switching takes 21 days and there’s no interruption of provide. Work will solely be required at your property if you happen to change meters as a part of the method.

31 August 2021: British Gas Offers To Shield Customers From Price Hike Until 2022

Following its announcement of a 12% improve within the value of its default normal variable charge tariff (SVT) from 1 October, British Gas has supplied to freeze SVT clients’ direct debit funds till February 2022.

The October hike is in step with the latest rise within the Ofgem value cap (see under) to £1,277 for households with common vitality consumption ranges.

British Gas says it is going to assess the market in February 2022 earlier than making a remaining resolution on altering direct debit funds to mirror the value improve. It says it is going to clean out any improve over subsequent months.

Any SVT clients who would reasonably begin paying the elevated value instantly (to keep away from the next leap of their payments subsequent yr) can amend their direct debit through the British Gas app or by contacting the corporate.

Ofgem can even announce the following stage of the value cap in February, to take impact in April. This will little question play into British Gas’s calculations.

The agency says its supply to freeze funds might be price £50 to clients who take it up: “Freezing direct debit payments until after winter will keep an extra £50 in customers pockets. We want to give our direct debit customers the option to create a bit of extra financial breathing space if they need it.”

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Energy Firms Flock To Match Rising Price Cap

26 August 2021

Bulb is the latest main vitality supplier to announce a value rise for its normal variable charge (SVT) default tariff-holders.

The transfer follows the announcement on 6 August by the market regulator, Ofgem, that its vitality value cap on default tariff costs will rise by over 12% on 1 October.

Typical Bulb clients pays an additional £2.90 every week when the brand new, greater cap comes into impact.

Earlier this week OVO Energy introduced a 12.25% improve within the value of its Simpler Energy default tariff, efficient 1 October 2021. Customers of SSE Energy Services, which is owned by OVO, will see an identical improve.

Rival massive corporations Eon and Scottish Power can even be elevating their costs by comparable quantities in October. Ebico, Igloo, So Energy, Zebra and Orbit have additionally introduced will increase.

The new Ofgem cap, which applies to clients on SVT default tariffs, will stand at £1,277 for households with common consumption ranges – up by £139 on the present stage. It is now at its highest because it was launched in January 2019.

The raft of value will increase introduced in recent days take corporations’ SVT tariffs as much as or near the cap. More will increase are considered within the pipeline.

Details of the Ofgem value cap, together with the determine for households with prepayment tariffs, might be discovered under.

EDF was the primary firm to reply to the value cap announcement final week, revealing its personal 12% improve, once more efficient on 1 October.

British Gas, the UK’s largest provider, is anticipated to announce a value improve for SVT-holders within the coming days.

Ofgem has raised the extent of the cap to allow firms to cost extra as a result of they’re going through vital will increase within the value of wholesale vitality, significantly pure gasoline.

Ofgem has urged clients on SVT default tariffs to buy round to probably save ‘hundreds of pounds’ by transferring to a less expensive tariff.

EDF Price Rise To Match New Cap In October

At-a-glance

First firm to reply to Ofgem value hike
12% improve efficient for default clients from 1 October
‘Hundred of pounds’ financial savings for many who store round

Energy big EDF has change into the primary provider to announce a value hike in step with the recent improve within the official vitality value cap administered by regulator Ofgem (see story under).

EDF’s transfer, which is anticipated to be matched by different main suppliers, will take the everyday cost of its normal variable charge ‘default’ twin gas tariff to £1,277 – a 12% improve – from 1 October. This is the date on which the brand new Ofgem cap comes into impact.

Philippe Commaret at EDF mentioned: “We know a value rise is rarely welcome, particularly in powerful occasions. In 2020, costs for our normal variable clients fell by a median of £100 a yr, and we’ll reduce costs once more as quickly as we’re ready.

“As Ofgem has defined, it’s international gasoline costs which have brought on the unprecedented improve in wholesale vitality prices and as a sustainable, long-term business we should mirror the prices we face.

“Customers on tariffs that are due to change in October will be written to, reminding them to check that they are on the best tariff for them.”

Rising wholesale prices

The regulator has raised the cap to £1,277 – it’s highest stage because it was launched in 2019 – in order that suppliers can cost their default tariff clients extra to take account of will increase within the wholesale cost of vitality, significantly pure gasoline.

Bulk costs have risen by 50% up to now six months resulting from chilly climate and growing demand triggered by business rising from Covid-19 lockdowns.

An estimated 11 million households are on varied suppliers’ default tariffs, largely as a result of they’ve by no means switched tariff or as a result of they haven’t switched for 2 or extra years and have moved to their provider’s default deal consequently.

An extra 4 million households are on costly prepayment tariffs, the place the Ofgem cap can even rise on 1 October, up £153 to £1,309.

£100s of financial savings

Ofgem says this mixed complete of 15 million households might save “hundreds of pounds” on their annual vitality payments by purchasing round and transferring to a less expensive deal.

Anyone switching now could be comfortably on their new tariff earlier than 1 October – the method of discovering a less expensive deal takes a matter of minutes, and the change itself can be full in 21 days.

There is not any interruption to produce and no want for work inside or exterior your property.

Update 6 August 2021: Ofgem Price Cap Leaps £139 To Record £1,277 In October 2021

At-a-glance…

Rise to hit 11 million default tariff holders
Prepay tariffs cap additionally rises
Regulator blames hovering wholesale gasoline prices

Energy market regulator Ofgem is elevating its cap on normal variable charge default tariffs by £139 on 1 October 2021, it introduced at this time. The 12% improve will take the cap, which applies to 11 million UK households, to £1,277 – its highest ever stage.

The cap on prepayment tariffs will improve by £153 on the identical day, taking it to £1,309. Around 4 million households will really feel the impact of this rise.

Both caps can be reviewed over the winter and new ranges will take impact in April 2022.

Ofgem imposes the cap to restrict how a lot vitality firms can cost clients on default and prepay tariffs, nevertheless it has elevated the extent due to hovering wholesale vitality market costs, citing a 50% improve within the value of wholesale gasoline.

The quoted cap figures apply to households with common annual consumption. When households are on default tariffs, it’s normally as a result of they’ve by no means switched supplier or tariff, or as a result of they haven’t switched for 2 years or extra.

Many individuals in rented lodging and on decrease incomes have prepayment meter tariffs.

The Ofgem cap doesn’t restrict the scale of payments however the quantity the vitality firm can cost for every unit of gasoline and electrical energy used, plus any standing expenses. Bills subsequently differ in line with consumption ranges in every family.

Substantial financial savings

Substantial financial savings can normally be obtained by those that change from a variable charge default tariff to a fixed-rate or aggressive variable charge deal (£477 is the minimal saving of the highest 10% of savers who switched gasoline and electrical energy by way of Comparison Technologies, Forbes Advisor’s vitality comparability associate, within the interval between 1st Jan 2020 and thirty first Dec 2020).

There are additionally aggressive prepayment tariffs available to these keen to change.

Ofgem commented: “Customers can avoid the increase by shopping around or asking their supplier to put them on a better deal.”

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Those on default and prepay tariffs now have just below two months to change vitality supplier or transfer to a less expensive tariff with their current supplier. The excellent news is that switching takes 21 days – and there’s no interruption to produce or any want for work at your property, inside or out. Running a citation takes a matter of minutes utilizing our comparability service.

Update 29 July 2021: Ofgem Chief Hints At £150 Price Cap Hike

Jonathan Brearley, head of the vitality market regulator, Ofgem, says its vitality value cap might rocket by £150 from 1 October 2021. The precise improve can be introduced on Friday 6 August 2021.

The value cap applies to straightforward variable charge ‘default’ tariffs, and limits how a lot vitality suppliers can cost for models of gasoline and electrical energy and any standing cost related to the tariff. At the second it stands at £1,138 a yr for a typical family with common consumption.

An estimated 11 million households are on default tariffs, both as a result of they’ve by no means switched supplier or as a result of they’ve been moved to a default association by their supplier following a earlier deal coming to an finish.

There is an identical cap in place for the estimated 4 million households with prepayment meters – it stands at £1,156 a yr.

Most suppliers set their tariff costs on the most allowed by the cap. As the annual determine is a cap on unit charges reasonably than on the scale of payments, the quantity payable will at all times depend upon the quantity of vitality used.

Mr Brearley says the cap will rise as a result of international costs for fossil fuels, particularly gasoline, are growing at an unprecedented charge. Ofgem will allow suppliers to cost greater costs as a result of they’re paying extra on wholesale markets.

“Regrettably, the increase in wholesale costs will feed through to the price cap and, although final analysis is not complete and other costs will also determine the overall level, it could add around £150 per household to the next level of the price cap,” he mentioned.

Ofgem pronounces the change to the value cap prematurely to permit these affected a possibility to change to a less expensive deal. The regulator actively promotes switching, declaring that there are a lot of cheaper tariffs available to these on default offers – usually fixed-term, fixed-rate tariffs that lock within the unit value for 12 or 24 months.

Mr Brearley added: “While the price of these fixed contract deals is also increasing on the back of higher wholesale energy prices, if you shop around you may well still be able to save hundreds of pounds on your energy bill.”

Switching now would imply locking in at this time’s charges forward of an additional anticipated surge in wholesale costs within the autumn.

Auto-switching on horizon

As we reported final week, the federal government is contemplating introducing automated switching for these on default tariffs except they decide out of the method.

However, this may not be launched till 2024, leaving default clients vulnerable to comparatively excessive vitality prices for the following three years except they select to change.

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*At least 50% of savers who switched through our associate of selection energyhelpline within the interval between 1st Jan 2021 and thirtieth June 2021 saved £101.

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10 April: Steep Rise In Legal Action Over Unpaid Bills

4 April: Vulnerable Customers To Receive Compensation

Claiming compensation

What are the prepayment meter guidelines?

1 April: 12% Cap Cut Thanks To Falling Wholesale Prices

26 March: Ofgem Consults On Future Of Price Cap

23 February: Regulator Working On Plans To Tackle Debt

15 December: Ofgem Proposes £16 Price Cap Adjustment To Help Struggling Customers

23 November: Ofgem Proposes To Make Market ‘Fairer’

16 November: Bills Tipped To Increase From January

2 November: UK Remains Vulnerable To Supply Disruption

1 November: Final Amount Hinges On Success Of Octopus

18 October: Firms Told To Publish Customer Reviews

12 October: Bills Would Rise £1.50 A Month For Q2 2024

30 September: Prices Remain Close To Historic Highs

29 September: Average Annual Bills To Dip Below £2,000

Fixed-rate tariffs available to new and current clients

Fixed-rate tariffs available to current clients solely

25 September: Action Urged To Curb Fuel Poverty

14 September: GB Insulation Scheme Offers £400 Bill Savings

13 September: Ofgem Extends Forced PrePay Meter Protection

1 September: Storm Payments Triple Following Review

1 Sept: Octopus Adds 1.4m Customers With Shell Purchase

25 August: No Immediate Prospect Of Return To 2021/22 Levels

Average consumption figures

19 August: Figures Reflect Reduction In Estimated Average Usage

27 July: Average Bills Reported To Be £200 Cheaper In 12 Months

26 July: Improvements This Winter For Households, Businesses

25 July: Fixed Rates Unlikely To Trump SVRs Over 12 Months

18 July: 12-Month Deal Set At £2,100 – £26 Above Price Cap

Available to new and current clients:

Available to current clients:

13 July: ‘Powerwall’ Will Harness Solar Energy To Charge EVs

7 July: Consumers To Be Rewarded For Avoiding Peak-Time Usage

5 July: Cornwall Issues Price Cap Forecasts Until June 2024

1 July: Customers Finally See Benefit Of Falling Wholesale Prices

29 June: Households Using Less Energy To Trim Soaring Bills

14 June: Regulator Tells Consumers To Think Before They Fix

12 June: Small Business Group Wins ‘Blend & Extend’ Promises

31 May: Prepay Customers Urged To Redeem By End Of June

25 May: Cap Drop Reflects Reduction In Wholesale Prices

18 May: Cornwall Insight Estimates Cap To Sit At £2,053

18 May: Firms Provide Refunds After Breaching Price Limits

17 May: E.On Next, Octopus, Good Energy Missed Deadlines

12 May: Affordability Issues Dog Upgrades To Housing Stock

9 May: Analyst Sees Competition Return As Market Stabilises

24 April: ‘Tell Us Once’ Principle Across Range Of Providers

18 April: Campaigners Insist Wider Protections Are Required

31 March: Analysts Says Business Energy Costs Set For 133% Rise

Huge will increase in retailer for business customers

30 March: Small Firms Face Stark Choices As Bills Set To Rocket

27 March: Firms Urged To Encourage Voucher Use

15 March: Prices Due To Fall In July As Lower Cap Kicks In

14 March: Companies Must Comply With Code Of Practice

8 March: Govt Urged To Hold Price Guarantee At £2,500

27 February: Govt Urged To Ditch Hike As Cap Heads To £2,112 In July

21 February: Govt Tells Regulator Not To ‘Pull Any Punches’

20 February: July Cap To Undercut Govt Price Guarantee

15 February: Wholesale Price Falls To Feed Through To Bills

10 February: Energy Secretary Says More Needs To Be Done

7 February: Grant Shapps Pledges To Bring Down Bills

6 February: Falling Wholesale Prices Fuel Optimistic Cap Forecast

5 February: Government seeks finish to ‘abhorrent’ behaviour by suppliers over prepayment meters

3 February: British Gas At Centre Of Controversy

24 January: Households Earn Credit By Pausing Consumption

23 January: National Grid ‘Power Hour’ Slated For Tonight

19 January: Cornwall Insight Says Cap Could Fall To £2,200 In July

12 January: Charity Calls For Moratorium On Further Forced Prepay Switches

10 January: Industry Body Warns Thousands Of Small Businesses Could Go Bust Following Change To Support Package

4 January: Gas Price At 12-Month Low But Consumers To Wait Months For Reductions

21 December: Bulb Members To Transfer Automatically To Octopus

13 December: Vulnerable Customers To Receive £20 Credit After Supplier Fails To Provide Support

30 November: £22.2 Grid Upgrade Billion Plan Will Meet Demand From Electric Vehicles

29 November: Tips Designed To Reduce Consumption And Cut Bills