What’s going on with the energy market?

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UPDATED 21 Sept 2022:
Our Energy Specialists have brought together what we know to help you understand what's happening.

The government has announced (21 Sept) a new scheme that will see energy prices for non-domestic energy customers such as businesses, SME, charities and public sector organisations cut. The Energy Bill Relief Scheme (EBRS) will offer discounts for all firms for six months from 1 October. The government’s Energy Bill Relief Scheme will provide a discount on wholesale gas and electricity prices for all non-domestic customers whose current gas and electricity bills have been significantly inflated in light of global energy prices. This support will be equivalent to the Energy Price Guarantee put in place for households.

The government has announced (8 Sept) changes to how energy bills will be charged to help reduce the impact of the proposed October price cap. The new Prime Minister, Liz Truss, has said that average bills will be held at an average of £2,500, under a scheme called the Energy Price Guarantee (EPG), for the next two years. This means that the October price cap, announced by Ofgem (26 August) will no longer be implemented in full for customers. From 1 October the government will supplement what customers pay for energy which means that instead of the typical household dual-fuel bill rising to £3,549, a typical household will now see an average annual bill of £2,500.

The government set out plans (8 Sept) to move nuclear and renewable electricity generators to lower price contracts to cut bills. In an address to the House of Commons the Prime Minister Liz Truss has said, "Renewable and nuclear generators will move on to contracts for difference, to end the situation where electricity prices are set by the marginal price of gas.".

Ofgem and the government
On 24 May 2022 the energy regulator, Ofgem, said that the energy price cap, which limits how much energy providers can raise prices, is likely to increase to approximately £2,800, due to continued volatility in global gas prices. Ofgem’s estimate is based on a consumer with average consumption and paying by direct debit. This could mean that the typical household energy bill may rise by about £800 a year from October.

The government announced on 26 May 2022 that every household in the UK will get an energy bill discount of £400 in October as part of an updated package of measures to tackle electricity and gas prices. Households will see a discount of £66 applied to their energy bills in October and November, and £67 a month from December to March 2023 through the government's Energy Bill Support Scheme.

On 11 July 2022 the energy regulator Ofgem updated their assessment of energy prices and said that their May estimate, of a rise of £800 in October, now looked too low.

On 26 July 2022 the government's Business, Energy and Industrial Strategy Committee published a report calling on the government to update its energy bills support to help the most exposed households and consider introducing a social tariff.

On 4 August 2022 Ofgem announced that the price cap review period will move from six months to three months (quarterly). Ofgem says that the change is to reflect the most up to date and accurate energy prices.

On 26 August 2022 Ofgem announced that the price cap for customers on a standard variable tariff will increase to £3,549 if they pay by Direct Debit and to £3,764 if they pay any other way. For customers with a prepayment meter, the price cap will increase to £3,608.

On 8 September 2022 the government announced a new energy bills scheme, Energy Price Guarantee (EPG), that will reduce the impact of the planned price cap rise. The government also announced plans to move nuclear and renewable electricity generators to lower price contracts to cut bills.​​​​​​​

On 21 September 2022 the government announced a new energy bills scheme to help support businesses. The Energy Bill Relief Scheme (EBRS) will help reduce the impact of energy price rises for non-domestic energy customers such as businesses, charities and public sector organisations for six months from 1 October.

Global gas price volatility
Increased demand for gas as the Covid pandemic eased coupled with the Russian invasion of Ukraine has seen global gas prices rise rapidly with concerns over supply. While the UK would not be directly impacted by supply disruption, as it imports less than 5% of its gas from Russia, it would be affected by prices rising on global markets as demand in Europe increased.

Gas prices have been rising throughout the year and jumped further (5 Sept 2022) after Russia announced that it would not reopen its main gas pipeline to Europe. Russia has been cutting flows through the Nord Stream 1 pipeline throughout the summer. Although the UK is not reliant on Nord Stream 1 for gas, the Kremlin's decision to squeeze supplies to Europe has driven up the overall cost of wholesale gas. Prices in the UK rose as much as 35% during trading on 5 Sept 2022.

Rising bills help
With the price cap rising in October 2022 we want to reassure you that we are dedicated to helping you where we can. We have put together some helpful resources where you can access support from us, charities and the government.

What should I do about my energy tariff?
Regardless of the tariff you're on, you are protected by the new EPG and do not need to take action. We'll be in touch with customers on fixed tariffs about next steps.​ ​ ​

Contact our Energy Specialists if you’re having difficulty
Our Energy Specialists are here to help you if you’re concerned about your energy bills. If you’re struggling to pay, please visit our help page to find out more about how we can support you. You can reach out to our Energy Specialists for personal advice on Facebook and Twitter.

Blog updated: 0950hrs 21/09/22