BBC News 23 September 2021
Householders face a rise in energy bills, as well as the possibility their supplier could go bust.
This is due to a massive rise in the price energy suppliers pay for gas.
Why are gas prices so high?
There's been a worldwide squeeze on gas and energy supplies.
- A cold winter in Europe last year put pressure on supplies and, as a result, stored gas levels are much lower than normal
- There's been increased demand from Asia (which also suffered a cold winter) for liquefied natural gas.
In the UK, most big domestic suppliers buy gas months in advance - so they have yet to pass on the price rises of the past few months.
Many customers are also on fixed tariffs so, until the tariffs run out, bills won't go up.
What is the energy price cap and how is it going up?
The energy price cap is a backstop introduced in January 2019 and set by the regulator Ofgem under government policy.
It sets the maximum price suppliers in England, Wales and Scotland can charge customers on a standard - or default - tariff.
A higher cap is due to come into force from 1 October, with about 15 million households facing a 12% rise in energy bills.
- Those on standard tariffs, with typical household levels of energy use, could see an increase of £139 - from £1,138 to £1,277 a year
- Households with larger than average energy use will pay more than £1,277 a year
- People with pre-payment meters could see an increase of £153 - from £1,156 to £1,309
- Households on fixed tariffs will be unaffected, but those coming to the end of a contract probably won't be able to find a cheap deal to replace it
Because energy firms are now scarcely making a profit on gas, it's likely the energy "cap" will rise again in April.
In Northern Ireland, there is a separate energy market with two suppliers.
Prices will also rise next month by 21.8% (SSE) and 35% (Firmus).
Why is the UK affected particularly badly?
Gas prices are rising all across Europe, but there are extra reasons why the UK is hard hit:
- The UK is one of Europe's biggest users of natural gas - 85% of homes use gas central heating, and it also generates a third of the country's electricity
- Supplies of renewable energy are down because it's been the least windy summer since 1961 - over the last week, wind provided just 9% of power for England, Wales and Scotland
- A recent fire at a National Grid site in Kent closed a power cable supplying electricity from France.
Which energy suppliers have gone bust so far?
Since wholesale gas prices started to spike, a number of firms have collapsed due to financial pressure.
They have been unable to pay higher wholesale prices or get customers on fixed tariffs to share the burden by increasing bills.
Hub, Money Plus, Utility Point, People's Energy, PFP, Green and Avro have been forced out of business.
Nearly 1.5 million customers have been affected.
At the beginning of 2021 there were 70 UK energy suppliers. Now, there are just over 30.
Industry sources have said there may be as few as 10 left by the end of the year.
