Rising energy prices

Energy prices are soaring thanks to the unprecedented price increase in the cost of wholesale energy.

Q1: What is ‘wholesale’ energy?

Energy suppliers buy energy or gas in bulk from energy producers, and this is known as ‘wholesale energy’. The suppliers, or energy companies, then add their charges to cover the cost of getting the energy to us, their customer.

Q2: Why does the price of wholesale gas keep going up?

There are several reasons:

• A cold winter in Europe this year meant a lot of demand, and a reduction in stored gas supplies (which had been bought at a cheaper rate)
•  More demand from Asia for liquefied natural gas
• Technical and geopolitical issues.

Q3. Is it only the UK that is affected?

No, many countries across Europe are affected. We are being particularly badly hit though, because of our dependance on natural gas. We use it to heat 85% of our homes and to generate a third of the country’s electricity. We are one of the biggest users of natural gas in Europe but we store less gas than other countries.

Q4. What is the price cap?

Confusingly, the price cap does not limit the total amount you pay for energy. The cap is on the cost of each unit of gas or electricity. So, if you use more, you pay more.

Q5: Am I on a price cap?

Most people who aren't on price fixed deals with their energy supplier are on a price cap. You're probably on it if:

• You've never switched tariff
• You did switch tariff, but when the deal ended, you did nothing
• Your energy firm recently went bust and you were moved elsewhere.

Q6: What can I do about the rising cost of my energy bill?

In the past, consumers have always been advised to switch energy supplier to make sure they’re on the best deal available. However, in this unprecedented situation, consumers are being advised do nothing - even if you are already on a fixed deal. This is because better priced offers are simply not available.

With no cheaper energy tariffs, the only thing we can do to offset the price rise is to improve the energy efficiency of our homes.

The Energy Saving Trust has tips and information on how to do this here.

Q7: When will cheaper deals be available again?

Unfortunately it’s not possible to predict when energy prices could decrease.