The energy crisis explained
This blog was last updated 09.09.22.
Will the Energy Price Guarantee announced by Liz Truss be shown in my bills?
Correct as of 09.09.22: If you’re a One Utility Bill customer, your monthly payment will be updated to reflect the new Energy Price Guarantee. We plan to announce full details within 7 days of the announcement, and send everybody a new price by October 1st.
Like the rest of the country, we got the details on 8th September, so right now we’re making sure we’ve got the systems in place to pass this on to our customers. You’ll get it from us the same as if you’d gone directly to a supplier.
All new customer quotes from 09.09.22 will be correct and based on the Energy Price Guarantee tariff.
You’ll have seen in the news that energy prices reached unprecedented levels over the last couple of years.
This was caused by a combination of factors that formed the “perfect” environment for higher energy costs. Since Summer 2021 things have gone off the rails - nobody has ever seen anything like this and prices are completely unprecedented.
Understanding the energy market is difficult at the best of times, let alone during a crisis. Until government intervention in September 2022, energy bills were due to escalate to even more unaffordable levels for many people in the UK.
We pulled together this breakdown of the situation in terms that are easy to understand, and to highlight what support is available.
What’s been going on with the energy market?
Like we said, it’s complicated, and several things have contributed to the situation, and there are updates incoming all the time.
Here’s a rough overview of the problems in the market and how they increased energy prices:
Lack of gas storage: In Winter 2021/22, gas storage across Europe was too low to meet demand. Gas stores are used to prevent shortages when there’s high demand, e.g. during Winter when people use more energy to stay warm. The stored gas wasn’t enough to prevent shortages, because Russia dramatically decreased the amount of gas it exported to Europe, making it more expensive. European countries imported more gas via LNG ships, which were originally headed countries recovering from the pandemic. Europe needed to pay more to attract the LNG ships, making the gas more expensive.
COVID-19: More people across the world are working from home since the pandemic, which means using more energy. Higher demand for energy has increased wholesale energy costs, bumping up prices.
Low wind energy generation: In 2021, the UK had one of its least windy summers since 1961. Less wind power meant more energy had to be generated by burning fossil fuels, which are more expensive.
Major power cable shutdown: A fire at one of the UK’s major power cables in France shut it down, making energy from other sources more expensive.
War in Ukraine: Russia’s invasion of Ukraine meant sanctions against Russia, meaning no, or dramatically reduced, Russian gas supplies for many European nations. Again, this pushed up prices. We’ve got a full breakdown of why the war in Ukraine raised energy prices, ‘cause it’s a complex issue.
All of these issues affected wholesale energy prices, i.e. how much it costs for energy suppliers to buy the energy they supply to you. This increased energy bill prices too.
What does that mean for me?
Until the Energy Price Guarantee, prices for wholesale energy were being passed from suppliers to consumers, meaning that the energy bills were due to be capped at more than £3500 for an average family in October 2022. The government introduced the Energy Price Guarantee, capping prices at £2500 until 2024. Still an unprecedented level, but less than expected and a relief for many people.
We're updating all of our customers with how the Energy Price Guarantee will affect their monthly payments by October 1st 2022.
Here's how you'll get the Energy Price Guarantee as a customer:
The Energy Price Guarantee basically means that the suppliers we work with will keep their energy tariff (what they charge per kWh of energy) at the rate set by the government. The price we charge you for energy, including on an Unlimited Energy deal, is based on this tariff. This means that our existing customers will get a new monthly price based on this tariff, and new customer quotes will be based on this tariff from September 9th 2022.
We'll be updating customers with a new price by October 1st 2022.
How does energy pricing work and why has it been increasing?
When you pay your energy bill, you’re not just paying for the energy you’ve used.
Energy bills are made up of lots of elements, some of which have been getting more expensive, meaning bills have been getting more expensive and unaffordable. The Energy Price Guarantee means that growing prices for wholesale energy won't affect energy bills until 2024, when the government hopes the energy crisis is more under control and prices are more stable.
Check out the infographic to compare wholesale prices from the last couple of years to the latest prices:
Basically, the prices suppliers paid for energy kept increasing, and so did the prices they charged for your bills. The Energy Price Guarantee means wholesale energy prices won't affect your bills again until 2024.
How your One Utility Bill package helps behind the scenes
You get all of your bills managed for you when you sign up for a One Utility Bill package. We exist to make bills as stress free as possible. That’s no small task during an energy crisis, but we want you to stay informed and know why you’re paying what you’re paying.
We're keeping you in the loop about energy prices and changes to price caps that affect your bills, on top of the usual stuff you rely on us for - keeping your finances easy to manage with one payment, getting rid of bill splitting stress with housemates and calling suppliers (so you don’t have to).
If we do our job, you won’t even notice us at all, but here’s a breakdown of what we do for the average One Utility Bill customer:
We’re here for you - and sources of support
It’s our job to manage bills for you. We’re the experts who deal with all your bill-related challenges, especially during an energy crisis. If you’re worried about your bills and what the Energy Price Guarantee might mean for you as a customer, sit tight! We're updating our systems and all One Utility Bill customers will get an updated monthly payment price by October 1st.
When it comes to other sources of support, that’s not our area, but here are some experts who could be a good place to start:
Find your local council here - they may also have support in place