What’s going on with the energy market?

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UPDATED: 4 August 2022:
There is a lot of news and information about how much energy prices are likely to rise in the autumn. Our Energy Specialists have brought together what we know to help you understand what's happening.

Ofgem has announced (4 August 2022) that the price cap review period will now move to quarterly. The wholesale price of electricity and gas will now be reviewed by the energy regulator Ofgem every three months instead of the current six months.

A committee of MPs have said (26 July 2022) that the government should immediately update its package of support to help households with soaring energy bills before the cost-of-living crisis grips even harder. Members of the Business, Energy and Industrial Strategy Committee warned the government, in their report, that 'this Winter is going to be extremely difficult for family finances and it’s therefore critical that public funds are better targeted to those who need it the most'.

The energy regulator Ofgem has said (11 July 2022) that their original estimate of a rise of £800 in October 'now looked too low'. In May Ofgem advised that prices were likely to increase to approximately £2,800 in October but has now said that prices are looking higher than they did when they made that estimate. Ofgem did not give a new estimate about the October price cap, which will be announced in the coming weeks but some independent industry researchers have suggested that it could rise by over £1,300 (2 August 2022).

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.

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 jumped further (27 July 2022) after Russia cut gas supplies to Germany and other central European countries. Russia has been cutting flows through the Nord Stream 1 pipeline to Germany, with it now operating at less than a fifth of its normal capacity.

Rising bills help
With the price cap rising in April 2022 and Ofgem saying that there’s the prospect of a further rise in October 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?
Many are asking the question of ‘what to do about these rising prices?’ There is a lot of information and advice in the media and we understand that it can be overwhelming, especially the advice on whether or not you should switch your tariff. This is why our Energy Specialists have broken down the difference between a ‘fixed rate’ and a ‘variable rate’ to help direct you to what is best for you and your home. If you’re currently on a Standard Variable Tariff (SVT) you can look at your customer dashboard to see what tariffs are available to you.

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.