The energy price cap rose on 1 October 2021, meaning steeper energy bills for many households. But could the price cap rise again? And if it does, how can you keep your gas and electricity bills under control? Let’s take a look.
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What is the energy price cap?
Well, it’s basically a limit (or ‘cap’) on how much your gas and electricity supplier can charge you for energy.
Ofgem, the UK’s energy regulator, sets the limit to protect consumers on default energy tariffs (your supplier’s basic tariff). So, while it’s often best to shop around for energy deals, the price cap gives you at least some protection from paying excessively high tariffs.
Why is the energy price cap rising?
In short, reduced supply and higher demand push gas prices up. There are a few factors affecting the price of gas in the UK, including:
- Increased demand for gas around the world
- European gas shortages and low gas reserves
- Low wind speeds in the UK, which reduces our renewable energy production
Around 15 million UK households are facing a 12% rise in energy costs right now, and unfortunately, there could be more price hikes to come.
Could the energy price cap rise again?
Yes, especially if wholesale fuel prices keep spiking.
There is some short-term good news, though. From what we know so far, the cap won’t increase over the next few months. Meaning, the current cap should hopefully stay in place during winter 2021.
Will the price cap really rise in 2022, though? It’s too early to say for sure, but here’s why it will probably creep up.
- The demand for gas increases during autumn and winter, which puts pressure on supply.
- There’s no clear solution in sight for the gas shortages affecting Europe.
- Gas prices are unlikely to fall in the coming months.
Ofgem isn’t due to review the energy price cap until April 2022, although there’s a chance it’ll review the cap earlier. However, unless we see a drop in gas prices, it’s likely there’ll be a price cap increase next year regardless of when Ofgem reviews the current rates.
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How can you prepare for higher energy bills?
If you’re worried about rising energy bills, here are some tips for managing your gas and electricity bill this winter:
- Only heat the rooms you actually use during the day. If you spend most of your time in one room, a portable electric heater might be more economical than using your gas supply.
- Seal off draughts from windows and doors using draught-proofing strips. You can find reasonably priced strips in places like B&Q.
- If you can afford it, consider replacing old white goods, like washing machines and fridges, with newer, more efficient models. And if you put your new purchases on a 0% credit card, you won’t pay any interest if you clear off the balance within the 0% period.
- Rather than using a tumble dryer, let clothes air dry where possible.
- Turn electrical equipment off standby so you’re not wasting power.
- Put the heating on for an hour or so a few times a day. The house will warm up, but you’re not leaving the heating on all day.
Finally, if you can, consider putting money away now towards an emergency fund. This way, if your energy bills do creep up, you’ll have some spare cash available to cover the costs.
Takeaway
While there’s no guarantee the energy price cap will increase again in 2022, it pays to be prepared. Energy bills count as ‘priority’ debts, so if you don’t pay your bill, you could seriously damage your credit score and finances. You can contact your supplier and organisations like Citizens Advice right away if you’re struggling to pay.
