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Why have energy prices shot up and what help is out there?

All of us will have seen reports about rising energy prices and suppliers going bust recently. We’ll also be wondering if our own bills are ever going to stop going up

But why has this crisis happened?

It’s because demand for energy is on the rise as countries around the world get back to full speed after the Covid slowdown.

At the same time, supplies of energy are down. A cold winter last year meant we were using more energy than usual so there’s pressure on what’s left in storage.

Gas that’s piped from Russia is also in short supply. The war in Ukraine is putting even more pressure on that.

Gas is also used to produce about 40 per cent of our electricity in the UK, which is why bills are rising for both energy sources.

To top it all off, the energy price cap will rise again on 1 April 2022. The price cap, which had already gone up last October, is the maximum price suppliers can charge us per unit of energy on a standard tariff.

For those of us on a prepayment meter the cost for a typical home for a year will rise to £2,017 while those of us paying by Direct Debit will see a typical annual bill rise to £1,971. 

The price cap is due to be reviewed again in October 2022 – when it’s likely to rise even further.

It means the normal Quids in! advice to switch suppliers to get the best deal doesn’t apply for now. Even the big firms for the most part can no longer give us deals that beat the price cap. So sitting on the standard tariff is the least bad option for now.

If we’re already on a fixed deal then we should sit tight if it means we’re paying less than the price cap.

There’s help out there

The first place to turn if we’re struggling with energy bills is our supplier. They have to help us find a way we can pay what we owe.

It’s important to make contact – if we don’t try to work out an arrangement with our supplier, they may threaten to cut us off.

If we’re in a Band A-D home there’s a £150 council tax discount, and it may be available to others on low incomes too. And there’s is other help, including:

Warm Home Discount Scheme – £140 off our electricity bill or a £140 prepayment meter voucher. We could qualify if we get the guarantee part of Pension Credit or are on a low income. One thing to be aware of – if we switched supplier after applying to the scheme, it’s up to our new supplier to decide whether we qualify.

Winter Fuel Payment – a one-off sum to help us pay for heating over winter for those of us born on or before 26 September 1955.

Household Support Fund – This new fund was paid through our council to help with the cost of essentials. It has closed for new applications now but households that received £100 from the Winter Fuel Support part of the fund will get another £100 by the end of March 2022.

Cold Weather Payments – these are paid to us automatically if we get Universal Credit, Pension Credit, Income Support, Income-based Jobseeker’s Allowance or Income-based Employment and Support Allowance. We’ll receive the payment when the temperature in our area drops to freezing or below for seven days in a row.

Photo: Andres Ayrton / Pexels

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