April 2022 will see a record increase in global gas prices as the energy price cap will see a rise of 54%. The increase in prices is expected to affect approximately 22 million customers.
What is the energy price cap?
The energy price cap was introduced by Ofgem in January 2019 following concerns that consumers were paying too much for their energy. The price cap is reviewed by Ofgem twice a year with any changes coming into effect in April and October.
Why is the price cap increasing so much?
There has been a record rise in global gas prices over the last 6 months combined with quadrupling wholesale prices in the last 12 months.
Who will it affect?
The energy price cap increases will affect default tariff customers who haven’t switched to a fixed deal.
What are the increases?
Customers on default tariffs paying by direct debit are expected to see an increase from £1,277 per year to £1,971 per year – a £693 difference. Prepayment customers are expected to see an increase from £1,309 per year to £2,017 – a £708 difference.
What should you do if you need help?
Customers that are struggling to pay for their energy bills are urged to contact their energy supplier. Suppliers could potentially help those customers struggling to pay by offering debt repayment plans, payment breaks, emergency credit for prepayment metered customers, priority support and schemes such as the Winter Fuel Payment or Warm Home Discount rebate.
Government Energy Bills Rebate
Amid the price cap increases, Government has announced £9.1 billion Energy Bills Rebate to support around 28 million households with rising global energy prices. Millions of households are expected to receive up to £200 to help with the cost of living following the energy price cap increases.
From October, energy suppliers will apply the discount to domestic electricity customers, with the Government meeting the costs. The discount will then be automatically recovered from people’s bills in instalments of £40 over 5 years, beginning from 2023.
Households in England that are in council tax bands A-D will also receive a £150 non-repayable rebate which will be made directly by local authorities from April.
Find out more about the Energy Bills rebate here.
Alternative energy sources
With the price cap increasing by 54% in April 2022, many consumers may be looking at alternative energy sources such as domestic renewable energy and having these technologies installed. There are many different renewable energy products to choose from (for example, solar panels and battery storage) and renewable energy installers will be able to help consumers choose the technology that is right for their home.
Faisal Hussain, HIES Chief Executive, comments:
“The energy price cap increase will be a worry for many consumers. With the price cap increase we expect to see an increase in enquiries for renewable technologies over the next 12 months as many may look at alternative energy sources. There will be many consumers who are still on fixed deals with their energy supplier but as these fixed deals come to an end, we would anticipate renewable energy installer enquiries increasing and there being an increase in demand in the industry.
For consumers who are looking to have renewable technologies installed we would always advise them to look for a HIES accredited installer to receive consumer protection.”
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To find out more about HIES’s consumer protection offering, please click here.