So you’ve probably seen the news: wholesale gas prices are increasing. In fact, prices are now more than double what they were in April and have surged to almost 13-year highs(1). We’ve then seen a number of energy companies going out of business and their customers moved to a new supplier, with potentially more going bust over the coming months.
In this blog we’re going to talk through what’s happening and try and ask the big question: What does this mean for you?
So why are wholesale gas prices rising so quickly?
Well it’s down to that age old reason, supply and demand. There’s just not enough gas available to cover everything that we need it for, whether that be heating, businesses or anything else. Here are the some of the main reasons why:
Due to a colder than normal winter in China and a desire to get things back to how they were before Covid, prices for Liquefied Natural Gas are rising which means suppliers are choosing to send their gas to Asia rather than Europe(2).
The flow of gas from Russia is lower than normal due to tensions in the Ukraine which means there’s less coming into Europe(3).
A blaze at the electricity interconnector at Sellindge shut down the undersea power link with France, which meant we’re more reliant on burning gas to produce electricity(4).
In the UK we produce about a third of the gas we need ourselves, which means we need to import around two thirds to meet demand(5). With gas prices rising and supplies low, it’s a struggle.
Will we run out of gas?
No, the government is confident we have enough gas to see us over through the winter into the warmer weather(6).
What does this mean for me?
If you’re with us, then your supply is safe. For our fixed price customers, your prices will remain the same until your tariff ends. If you’re on a variable tariff, your prices are protected by the price cap. The price cap is reviewed every six months, with the next one being in April 2022. Whilst prices might go up then, it is too far away to know for sure. We’ll let you know on your bill if there’s a lower-priced tariff you can switch to between now and then.
If you’re not with us, we’d recommend checking that you’re on the best tariff you can get – and to take regular meter readings, so you’re only billed for the energy you use.
We recommend to not switch supplier. Wait until Ofgem has appointed someone to look after all the customers affected. You should also take meter readings, that way you can give them to your new supplier straight away.