Energy Price Crisis 2022


Updated 26 May 2022

The cost-of-living crisis is set to dominate 2022 with many households feeling significant pressure on their household budgets with energy costs having a considerable effect.

Currently around 24% of households in Fife can be considered to be in fuel poverty, however a recent report by the Resolution Foundation highlighted that this could triple to over 70% after 1st April 2022 without government support.

Beating these bigger bills will be tricky as many of the usual mechanisms by which we could reduce our energy bills have vanished, for example by switching your energy supplier.

In this blog we’re putting together some of our best advice on what you can do to try limit the impact of these price increases.

 

What’s happening to energy prices

Energy prices throughout 2020-2021. Source: Moneysavingexpert.com

The UK is experiencing an energy crisis, wholesale energy costs have increased significantly over the past year but as a result of the Energy Price Cap there is a delay in when these costs are passed onto customers.

In Autumn 2021 cheap fixed prices deals disappeared from the market, and price cap covered standard tariffs became the cheapest, and are likely to remain so for the foreseeable future.

In October 2021 the price cap increased by around 12%, currently to its highest ever level of £1277. It’s increasing again in April by around 54% to an £1971 for an average direct debit customer, or £2017 for those on prepayment meters.

It was also expected to increase in October 2022 by an additional 20%. However the horrific events across Ukraine and sanctions against Russia have caused wholesale energy costs to increase even further. This could see a larger price rise than predicted hitting in October. Additional Government support it is hoped, will be announced in the coming months.

Remember, the price cap is misnamed, it’s actually a cap on unit rates and standing charges, so if you use more you will pay more. It’s also important to remember that the £1971 figure is a UK average, it’s likely those of us living in Scotland are using at least 20% more than the UK average.

 Ofgem announced they expect to raise the price cap to an around £2800 for the average home, an increase of 42% in October 2022.

 

Tariff options

Usually, one of the easiest steps to take to reduce energy bills was to switch energy supplier, however there are currently no cheap energy tariffs available below the price cap level.

Our current recommendation is to stay put on the Standard Variable Tariff that’s protected by the Energy Price Cap. It’s unlikely there are any fixed price deals cheaper than the Price Cap.

All fixed price deals that are available are currently far more expensive than the price cap and we’d seriously advise against signing up to one of these deals. If you’re considering it please speak to an energy advisor first.

 

Payment methods

Unlike in previous years, there is no longer much of a financial incentive to choose a direct debit, which, historically was the cheapest way to pay. Tariffs vary slightly between Direct debit, Prepayment & paying on receipt of bill however there’s not much difference between them that this should be the deciding factor.

You can find videos on our YouTube channel discussing all the benefits and disadvantages of each payment method.

Some things to watch out for:

If you’re paying through a direct debit, don’t just listen to the suppliers recommended price increase. Ask for your annual consumption and divide this amount by 12 to get your recommended direct debit price. Remember the costs are likely to increase again in October, so you may want to overpay over the summer if you have the ability to do this.

If you’re on a prepayment meter you should either set money aside or top up extra throughout the summer to Off set the high gas costs in winter.

If you’re paying on receipt of bill, bear in mind winter bills will be far higher than summer bills, if you can set money aside you should do this.

 

Meter readings

With tariff’s changing on the 1st of April, it’s absolutely vital you submit a reading on or around this date. Due to the significant price increase ensuring you’re paying the correct tariff for the right amount of units could save you being over charged.

We’d recommend providing readings on a monthly basis over the next few months.

 

Price Cap costs

The table below shows the cost of the energy price cap for Standard Variable Tariffs paid through a direct debit. Those on Prepayment meters will pay more.

If you’re looking at a fixed price deal you should compare it with this to see if it’s more expensive.

October 2021 Price Cap April 2022 Price Cap
Electricity 24.86p a day standing charge

 

20.4p per kWh

55.70p a day standing charge

 

29.32p per kWh

Gas 27.08p a day standing charge

 

4.02p per kWh

32.03p a day standing charge

 

7.73p per kWh

*Specific values may vary slightly based upon payment method.

 

Ofgem Market Stabilisation

In order to help stabilise the energy market, in April 2022 Ofgem will implement two short term measures.

Firstly, energy suppliers will have to offer all energy tariffs to existing customers as well as new customers.

Secondly, if wholesale costs begin to drop, when someone switches energy suppliers, the new supplier will need to pay a market stabilisation charge to the old supplier.

These measures are likely to prevent the return of cheap fixed deals this year.

 

Government support

In order to support households with the cost-of-living crisis the UK and Scottish Governments have announced two interventions to support households.

Council Tax Rebate

In April 2022 every household in Scotland in a Council Tax band A-D property will receive a £150 rebate on their council tax that is designed to support households with the energy price and general cost-of-living increase. Fife Council have announced this will be credited to Council Tax accounts and households should be notified in March.

Council tax has been chosen as it’s the fastest way to target this support at households they believe will need it.

 

Cost of Living Grant

Every UK household with an electricity supply will receive a £400 grant credited to their energy account this year. This is for everyone and there is no criteria attached. This replaces the original £200 loan scheme proposed earlier this year. This award is likely to be spread over 6 months.

If you pay a Direct Debit or on receipt of a bill, this will be credited to your account. If you have smart prepayment meters it will be credited to your meter automatically. If you have a traditional Prepayment meter you’ll be sent a voucher to top up with.

 

Cost of Living Award: Means-tested Benefits

Those in receipt of means-tested benefits will receive an additional £650 this year. This will be paid in two separate payments in July and later in the Autumn.

Eligibility for this award includes: Universal Credit, Income-based Job Seekers Allowance, Income-based Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit & Pension Credit.

 

Cost of Living Award: Pensioners

Pensioners who receive the Winter Fuel Allowance will find that this year it will be topped up with an additional £300. This will be paid alongside the existing payment in November or December this year.

 

Cost of Living Award: Disabilities

Those in receipt of non-means tested disability benefits will receive an additional £150. Eligibility will include: Disability Living Allowance, Personal Independence Payment, Attendance Allowance, Scottish Disability Benefits, Armed Forced Independence Payment, Constant Attendance Allowance and War Pension Mobility Supplement.

 

Income maximisation

Ensuring you have as much income as possible is absolutely vital when our budgets are being squeezed.

We’d recommend contacting our friends at Citizens Advice & Rights Fife for free and impartial expert advice. If your household has someone of pensionable age, we’d suggest it’s even more important as this is the group that are most likely to be missing extra benefits such as Attendance Allowance or Pension Credit.

 

Grants and payments

You may be entitled to some of the existing grants below which can help you keep on top of energy costs.

Warm Home Discount

The Warm Home Discount is an annual rebate of £140 towards your energy costs. Most suppliers offer this scheme and you can make an application every Autumn for that Winter. Right now, applications are likely to be closed for Winter 2021/2022 but you can take a look at our dedicated blog or video below to find out more.

This Winter it’s expected the Warm Home Discount will actually increase in value to £150.

 

Winter Fuel Payment

You may be eligible for a Winter Fuel Payment if you were born on or before 26 September 1955. You could get between £100 and £300 to help pay your heating bills.

You can find more information about this here.

 

Cold Weather Payments

You may get a cold weather payment if you’re getting certain benefits. It’s a payment made automatically to those eligible when the temperature drops below 0°C for 7 consecutive days.

For each of these periods you’ll get £25.

You can find more information about this here.

You can check if a payment has been triggered here.

 

Child Winter Heating Assistance

This is a new benefit introduced by the Scottish Government. It is a payment to help disabled children and young people and their families with increased heating costs over the winter.

It’s paid automatically once a year to those eligible and is around £200.

You can find more information about this here.

 

Making your home energy efficient

Making your home more energy efficient is important to ensure you retain as much heat as possible, and produce that heat as efficiently as possible, saving you money.

It’s worth checking whether your heating system is due an upgrade, usually it’s recommended a gas boiler is upgraded at least every 15 years. There are also several alternatives to storage heaters that may help you save money too.

Keeping the heat in your home is the best way to reduce your heating costs, ensuring your home is well insulated is the biggest change you can make to do this.

You may be entitled to support to install these measures from the Warmer Home Scotland scheme, you can find out more about this on the Home Energy Scotland website.

 

Budgeting energy use

Without an ability to reduce the cost of our energy, the easiest way to spend less is to use less. That doesn’t mean turning the lights off and sitting in the dark! There are plenty of practical actions you can take to help save energy around your home, reduce your energy bill and your carbon emissions too.

Using your heating controls and finding ways to prevent heat loss around your home can help you keep warm for less. Try do the following or take a look at our heating controls blog.

  • Reducing your thermostat by 1°C
  • Using your thermostatic radiator valves correctly – see our YouTube video.
  • Keeping curtains and doors closed between rooms

In terms of your appliances and cutting down your electricity use, you could consider:

  • Switching appliances and devices off at the plug rather than leaving them on standby
  • Using a slow cooker or pressure cooker rather than an oven
  • Using LED lighting and switching lights off when that room isn’t being used – see our Youtube video.

These tips are just some of the simple tricks we can help you with. For more advice contact our energy advisors on the details below.

 

Debt and disconnection

If you fall behind on your bills you should get in touch with us for more advice.

You can also take a look at our dedicated blog for advice on dealing with debt.

If you have other debts, for example Rent or Council Tax arrears, catalogues or loans etc you should get in touch with Citizen’s Advice & Right’s Fife who can give you the best advice and support possible.

 

Failing energy suppliers

Around 28 energy suppliers have ceased trading over the past few months. This is due to them being financially unable to operate in the current turbulent market.

If your supplier fails, you’ll be appointed a new supplier, known as the Supplier of Last Resort. They’ll move you to their Standard Variable Tariff and ensure you have a continuous supply.

We’ve dedicated an entire blog to answering questions about what happens if your energy supplier goes bust. Head there to find out more.

 

Get advice

If you’d like further advice on anything discussed in the blog our energy advisors will be happy to assist. We can provide free and impartial energy advice tailored to your unique situation.

Our energy advisors can be contacted by:

  • Calling 01592 807930
  • Texting COSY then YOUR NAME to 88440
  • Emailing info@cosykingdom.org.uk
  • Request advice online
  • On our Facebook and Twitter social media pages