What is the Reality of the Energy Price cap in the UK, how high will my bills go?
We now know that household bills are expected to raise more than previously predicted, according to analysts.
Cornwall Insight has predicted that an annual bill, based on the number of electric and gas units typically used by a customer, could reach as much as £4,266 in January, this is of course causing worry and concern over how people will be able to afford to pay this.
How Much Will my Bill Increase?
The energy price cap – the maximum amount suppliers can charge customers in England, Scotland and Wales for each unit of energy – will go up in October.
Energy industry analysts Cornwall Insight predict an average annual bill will reach £3,582 at this point – £200 higher than the previous estimate.
And in January 2023, the next time the cap is due to be changed, it expects it to go up again to £4,266.
The higher estimate means the average household would be paying £355 a month, instead of £164 a month currently.
The average bill was £1,400 a year in October 2021.
Warning energy prices to hit over £4,200 in January
However, the energy regulator Ofgem, has questioned the reliability of future forecasts and urged “extreme caution” over predictions for January.
What Exactly is The Energy Price Cap and why is it Increasing so Much?
The energy price cap specifies a limit on the maximum amount you can be charged for each unit of gas and electricity used, based on an estimate of the average household user.
Explained simply, it is not the maximum possible cost to a household because if you burn a higher number of units, your energy bills will exceed the cap and if you use less, you will pay less.
The cap also incorporates a maximum daily standing charge – this is the cost of getting power into your home, this cost is determined by the cost to the energy supplier.
The largest cost, is the cost of the wholesale energy, this cap changes at the moment constantly, due to fluctuating prices.
Ofgem are also able to factor in an ‘adjustment allowance’ to allow for anything unexpected that may alter the cost.
The amount is also set differently, depending if you pay by direct debit, quarterly, on receipt of the bill, or via a prepayment meter.
The energy price cap was set up to protect the consumer from short term sudden price changes, it is adjusted every 3 months. October’s price cap is due to be announced at the end of August.
There are many factors that have caused the rise in energy prices, including the rise in demand once Covid restrictions were lifted, the war in the Ukraine has caused issues with the supply from Russia to all of Europe, with the supply being far less than usual and tanks not being able to be filled, in preparation for winter.
What happens if Russia turns off Europe’s gas supply this winter?
What Will the Effect be for the General Public?
One of the main reasons that the UK Inflation rate is rising currently is because of the increase of fuel costs. This will of course have an impact financially, when inflation is higher, there tends to be an increase in interest rates also.
When will inflation start to come down? | Bank of England
The increase in fuel prices obviously affect the pocket and are causing worry and concern for most.
Is There Help Available Towards Paying my Energy Bills?
Every household in Wales, England and Scotland will be given a one off £400 discount for their fuel bills in October.
This will be applied in monthly instalments, with money credited to accounts, money applied to meters or vouchers provided.
There are additional payments, for people means tested and pensioners.
No further information or measures will come into place, until the UK has a new prime minister in place.
How is my Fuel Bill Calculated?
What is Don’t Pay UK and will it work?
It is in the media that there is a group campaigning to make a stand against the rising costs, however there could be adverse effects on anyone that partakes in this, including potential legal action and possible negative effects to a credit score.
The campaign urges millions not to pay winter energy bills to protest rising prices but legal experts sound a warnin
What is Don’t Pay UK and what happens if I cancel my energy bill payment? | This is Money
What Could I Do to Save on Energy Costs?
The most important thing you can do yourself is to improve efficiency, the Energy Trust advises on some changes that could help.
In conclusion, the outlook for fossil fuels is that they should peak in 2025, with most countries on board with regards to changes needed for climate change, the problems with supply as mentioned above and huge prices increases, there needs to be change.
This is where renewable energy, green energy and biomass fit in.
Why Biomass?
The UK sustainability criteria for biomass use are some of the most stringent in the world.
The sustainability criteria include protections for forests, peatland and wetland to ensure that the carbon stock, the area, and the health of the forest are maintained.
The sustainability criteria also include greenhouse gas emission savings criteria, requiring that life-cycle emissions savings associated with the biomass use (production or cultivation, harvesting or collection, transportation, and processing of biomass) meet certain thresholds to ensure they deliver significant savings compared to any fossil counterparts.
There is the crucial role that biomass playing in improving the environment however, at this present time and looking into the future, it is now playing a vital role in saving money, biomass fuel is sustainable, with the fuel for the boilers usually being available from local businesses, this being in the form of pellets, woodchip and logs, this is great for the local economy and again reduces pollution as the fuel source is local and does not need to be transported from halfway across the world or even from your own land/resources – which would mean your fuel is free!
Biomass was certainly gaining interest and implementation prior to fossil fuel price increases, it is now however to be considered a really wise investment for a business and the home.
Call us today, to arrange a site visit or just to talk through your options, on 01550 777717
