Why have energy prices gone up?
To say that energy prices have risen since 2021 is an understatement. This article examines why energy prices have risen and what is happening in the market now.
Why have energy prices gone up?
In 2021, as we began to recover from the global pandemic and workforces returned to business, the demand for gas increased to the newly reopening businesses. The increase in demand coincided with the start of tensions in Ukraine, which threatened gas supplies, driving prices higher.
Electricity prices then rose in line with gas prices, as even though 40% of our electricity supply comes from renewable sources, the remainder is largely generated from gas-fired power stations.
Are energy prices still rising?
The good news is that we are starting to see energy prices decrease, thanks to the mild winter across the UK and Europe. Also, Liquid Natural Gas is coming to the rescue across Europe and the UK by filling storage facilities, meaning we no longer have to rely on gas from Russia.
Although energy prices are still higher than pre-pandemic rates, we have seen prices fall over spring and summer as the resources are not used as much as they are in winter.
Our handy graph on wholesale energy rates shows you the current market wholesale rates.
How much are the current household energy rates?
Most British households pay energy rates limited by the current energy price cap of £1,923 per year. Use our energy bill price calculators to find out what rates you currently pay:
Is there any support remaining?
Yes, there is still ongoing support for household energy. The support for households is as follows:
The energy price cap
The energy price cap is government protection put in place, calculated by Ofgem. It sets a maximum price that energy companies can charge households per kWh and is regulated by Ofgem, which has put a cap on the amount of profit suppliers can make.
Although Ofgem does not regulate the oil and gas production sector, it can control the amount of profit energy suppliers make, ensuring that household bills remain fair.
What can I do to reduce my energy bills?
There are many ways you can save energy on your household bills;
- Using an energy meter
- Installing smart meters
- Turn down your thermostat
- Using power-saving plugs
- Compare energy prices
Is there financial support to help pay my energy bills?
If you struggle to pay your bills, several schemes are available to help you.
You can speak to your supplier and agree to a payment plan that suits your budget and ensures your supply remains on. You can also ask them about the following:
- A review of your payments and debt repayments
- Payment breaks
- Access to hardship funds
- The government offers a winter fuel payment to those people born before 26/09/1956; this is normally between £250-£600 and includes a ‘pensioners cost of living payment’
- The government also offers a cold weather payment to those on certain benefits. You will get £25 for each 7-day period of cold weather that falls below zero degrees Celsius between 01 November 2023 and 31 March 2024
For more information, check out our full article on support for energy bills.
Can I compare energy prices?
There is still no flexibility to switch to a new supplier or get into a contract with your current supplier because there still needs to be more stability in the market.
It is expected that this will be back up and running later this year, and you’ll be able to compare gas and electricity prices.
You should also consider reading our guide on fixing energy prices until 2024.