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What's happening in the energy market? Your questions answered.

This is a confusing time for energy customers, with prices soaring and suppliers worried about staying in business. We've asked our energy expert, Justina Miltienyte, to answer your questions here.

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Given the unprecedented situation in the energy market at the moment, customers understandably have a lot of questions about how we've got here and how they and their bills are likely to be affected as things develop.

We asked Justina Miltienyte, energy policy expert at Uswitch, to answer some of the common queries we've received.

I'm worried about rising energy prices - should I switch my deal now?

"Even though there are deals available directly through suppliers, we would urge you to consider all your options and not feel forced into making a switch that could be harmful in the long term. Most new fixed tariffs are now significantly more expensive than the capped standard variable tariff, so you may want to wait until more deals become available. While some smaller suppliers may have deals that look attractive, they could be more vulnerable to going bust at the moment.

"You may need to weigh up whether to go with a standard variable deal that's capped so you pay less than most fixed deals at least until April 2022, or to keep your eyes peeled for a new fixed plan that costs more than the current price cap but might allow you to save later if prices continue to rise.

"Uswitch can let you know when more deals come onto the market, along with tips and insight, when you sign up with your email address below."

Can we let you know when deals are available?

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There aren’t any deals available through Uswitch but I’ve seen deals offered in whole-of-market results - why isn’t Uswitch offering deals?

"Although some suppliers are still offering deals which can be seen on our whole-of-market results table, we’ve made the decision not to offer them via our own switching service because we don’t believe they're suitable for the majority of customers. If you want to switch to one of those deals, you'll have to go directly through the supplier. We’re working hard to get more suitable deals available soon - you can sign up above to be notified when we have more deals on offer."

I'm on a standard variable tariff now - what should I do?

"If you're on a standard variable tariff, you will be subject to the already-announced £139 per year price cap level increase, which comes into force on 1 October.

"However, you won't be subject to any further price rises until 1 April 2022, when the next price cap (due to be announced in February 2022) will come into force. Effectively, therefore, a standard variable tariff is capped at £1,277 per year until next April, which is lower than most fixed deals on the market at the moment. Unless you can find a fixed deal lower than £1,277 per year, stay vigilant and see what the situation looks like once the new price cap level has been announced - it's also unlikely you'll have to pay exit fees when you want to switch away from your SVT."

I'm on a fixed deal that isn't due to end for a few months - what should I do?

"If you've got a few months left on your fixed deal, you should stick with it until it comes to an end. You're on as good a tariff as you're likely to find at the moment - the vast majority of options on the market will almost certainly involve you paying more than you currently are. Assess the situation when you reach the final 49 days of your contract as things are likely to have changed."

I'm on a fixed deal that's due to end within 49 days - what should I do?

"It's important to remember that although wholesale prices are rising right now, the price you pay until the end of your fixed deal will stay the same. You should stay where you are and assess the situation at the end of your deal. You'll be rolled onto an SVT at the end of your deal which, as we've discussed above, is effectively capped at £1,277 for the next few months. You may therefore want to stay on that SVT and be protected until next April."

I'm on a fixed deal that ends tomorrow - what should I do?

"If your fixed plan is ending today or tomorrow, you'll need to shop around and decide what the best course of action for you will be. Again, the standard variable tariff you'll be rolled onto won't go above £1,277 between October 2021 and April 2022. You might find a relatively cheap fixed deal but this is likely to be from a smaller supplier who could be at risk of going bust in the next few months due to those high wholesale energy prices, so it's important to be aware of that risk."

Why is there a shortage of gas?

“There are a lot of factors that have caused this shortage. As the world has emerged from the pandemic, global demand for energy has soared and sent wholesale gas prices rising. 

“Last year’s long cold winter depleted gas stores, but they weren’t replenished as usual this summer as prices rose. In addition, it’s been a calm, still few months, meaning that a lack of wind power has resulted in a higher demand for gas.”

Why does this mean my bills will increase?

“As demand for gas increases, the wholesale price your supplier pays for energy rises. A lot of electricity is also generated by gas-powered plants, meaning there has been a similar knock-on effect on electricity supplies.

“If you’re on a fixed deal, you’re protected from the rises in the market at least until your current deal runs out. The energy price cap for customers on variable tariffs also means the cap will not increase as much as the wholesale prices but it will be reviewed early next year, so customers who are on variable tariffs should continue to be vigilant and keep an eye on the deals available in case the prices rise again next year.”

How much have prices increased on average?

“Wholesale gas prices have increased by 70% since August, but customers will not see such a dramatic rise in their bills.

“The new energy price cap comes into force on 1 October, rising by £139 and taking the annual cost for those on default tariffs to £1,277. 

"Customers already on fixed deals will not see a price rise until their deal ends."

Can I still switch supplier?

“While you might find it’s better to wait for a while, there are still some providers offering fixed deals so you can still switch should you wish to do so."

I'm concerned my supplier will go bust - can I switch or should I wait?

“Customers can still switch as usual if their deal is coming to an end, but there is no need to be concerned about your energy supply. Even if your supplier goes bust, customers should be reassured that their energy supply will continue as normal and any credit balances they built up with those suppliers will be protected.”

What will happen if my energy supplier goes bust?

"If your energy supplier goes bust, Ofgem will begin the Supplier of Last Resort process to confirm a supplier which will take on the energy supply of the failed supplier's customers. This means you will be moved onto a supplier that Ofgem chooses (based on several criteria). As mentioned above, you won't lose your energy supply at any time, and your credit balance will be protected.

"However, if you were on a fixed deal, be aware that you'll be moved onto your new supplier's standard variable tariff. You should therefore assess your options in the same way that we've already mentioned."

What will happen if I'm mid-switch between two suppliers and they both go bust?

"It depends how far along in the switch you are - if it's been completed, you would be transferred to the SoLR for the supplier you'd decided to switch to. If it hasn't, you'll go to the SoLR for the supplier you were in the process of leaving. To reiterate, though, your energy supply won't be affected."

I've heard about suppliers potentially entering "special administration" - what does this mean?

"Ofgem's special administration measure (officially called Energy Supply Company Administration) is designed to ensure that customers of a large energy supplier are supported in the event of the supplier becoming insolvent. It's similar to the Supplier of Last Resort measure, which is designed for smaller suppliers going out of business. However, because there are likely to be more customers with a large supplier, they won't be moved to a different supplier until either a buyer or new investment is found, or a solution that allows customers to move to other suppliers over a longer period of time is agreed. As with the SoLR process, customers won't lose energy supply at any time."

When is this situation likely to be resolved?

“It’s hard to say. The government is taking the situation seriously and is working with suppliers and Ofgem to work out the best ways to support consumers, along with businesses and energy providers.”

I'm worried about being in debt to my supplier - what should I do?

“If you’re struggling to pay your bills, get in touch with your supplier as soon as possible. Many energy suppliers offer tailored help to customers who may be struggling with their bills, from debt repayment plans to energy efficiency schemes. 

“You should also see if you are eligible for any government schemes, such as the Warm Home Discount and Winter Fuel Payment.

Is there any help for households?

“Debt charities such as StepChange provide guidance for people experiencing financial difficulties. National Energy Action also offers advice on energy bills and keeping warm at home.

“There is also extra help available for vulnerable consumers through schemes like the Winter Fuel Payment, Cold Weather Payment, and Warm Home Discount.” 

How much could bills rise by?

"SVT tariffs will stay set to the level of the cap. It’s possible that this will increase again in six months’ time but that depends on what happens with wholesale prices."

Is the energy price cap in danger of rising before next year?

"It's unlikely - it's set to be reviewed in February 2022."

Is my credit at risk?

"No - even if your supplier goes bust, customers should be reassured that their energy supply will continue as normal and any credit balances they built up with those suppliers will be protected."

What should I do if I'm on a prepayment meter?

"Prepayment customers are already protected by the prepayment price cap. The cap is due to rise on 1 October but it will then stay at the same level until at least 1 April next year. There is no need to top up a lot right now, especially if that puts you into financial difficulty. 

"If you are on a prepayment meter and your supplier goes bust, don't worry, you will still be able to top up and your credit will be protected. The new supplier would be in touch to let you know of any changes in payment arrangements."

What else can I do to lower my bills?

"Pay less - as mentioned at the top of the page, you need to really think about the deal you're currently on and the potential costs of deals available on the market at the moment. Paying less may not be possible right now, but as deals come back onto the market, the situation may change.

Waste less - be as energy-efficient as possible by tracking your energy usage with a smart meter, beefing up your insulation and switching off plugs that aren't being used.

Use less - take a look at our energy-saving tips, which cover everything from efficient lightbulbs to thermostats and colder washes."

Have you got a question we haven't answered here? Get in touch with the Uswitch contact centre on 0800 6888 557 and our energy experts will be able to help.