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Gas and electricity price changes 2020

Gas and electricity price changes 2020

As of August 2020, most suppliers have announced energy price drops, with average decreases of around £84 per year. Find out what this means for you here.

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Run an energy comparison and switch before 12 February for a chance to win one of 10 prizes of up to £1,320 towards your energy bills (T&Cs apply).

See which energy suppliers have made gas and electricity price rises or price cuts, how much prices went up or down by, and when price changes will come into effect.

And don't forget, whether gas and electricity prices are rising or falling, it's always a good idea to compare energy prices in your area. When you switch your energy supplier with Uswitch you could save hundreds.

Our comparison rates are always kept up to date, so you can be sure that you're getting accurate results when you do a comparison.

2020 gas and electricity price changes

Since the introduction of Ofgem's energy price cap in January 2019, most suppliers have based the cost of their default tariffs on the rate of the price cap.

Following a decrease in the price cap level as of October 2020, most suppliers have dropped their prices slightly for customers on default tariffs. You can read more detail about these price changes for the 'big six' suppliers below, including a recent history of each supplier's price changes:

The price cap only applies to suppliers' "default" or standard variable rate tariffs, which are typically their most expensive type of energy plan. If you're on a fixed energy deal, your price is set for the duration of the fixed plan - usually 12 to 18 months from when you started the plan.

According to Ofgem, more than half of UK households are currently on a standard variable rate tariff. If you're one of them, it's a good idea to shop around to see if you could save by switching to a cheaper fixed deal. Even if your supplier has recently announced a price cut, it's likely you could find a cheaper fixed plan.

What can I do if my energy supplier raises prices?

If you're on a standard variable tariff and your supplier raises its prices, you can switch to a new supplier (or even another tariff with your current supplier) to get a better deal.

Whether or not your energy supplier has recently put up prices, it's always a good idea to run an energy comparison to see if you could save. If you're on your supplier's standard variable or default tariff, you could save significantly by switching to a cheaper fixed deal.

I've never switched energy before - how does it work?

It's easier than you think to switch energy supplier, we promise.

Here's what you need to hand:

  • Your postcode
  • A recent energy bill
  • Your bank information (to set up your direct debit)

If you can't find an energy bill we can estimate your usage based on the size of your home.

That's it! We'll do all the rest, including comparing top deals in your area, and providing savings figures, customer ratings, and the ability to filter by preferences including green plans and more.

If you want a little more assistance, call one of our energy switching experts on 0800 6888 244.

For step-by-step instructions on how to switch energy suppliers after a price rise, read our dedicated guide about how to switch your supplier for gas and electricity here.

What causes energy prices to rise?

There are several theories on what factors impact suppliers' gas and electricity prices, and all of them have some element of truth but they’re not the underlying causes.

Market forces can cause the wholesale price of gas to go up, which then means energy customers are charged a higher bill, but this isn't the whole story.

So what is the cause of gas and electricity price rises?

The energy price cap

The most recent wave of price changes have been in reaction to changes in Ofgem’s energy price cap. But how can a cap change the prices suppliers are allowed to charge?

The cap was first introduced in January 2019 and limits the amount that suppliers can charge for their default gas and electricity tariffs. Many suppliers, including the big six energy providers, set their rates right up to the maximum allowed by the cap.

Just a month after its implementation, Ofgem announced it would increase the rate of the cap to £1,254 per year. Many suppliers reacted by announcing price rises to come into effect when the price cap changed in April 2019.

The cap has since been reviewed twice a year, with the most recent change being a price cut of an average £84 from October 2020.

Limited supply

Gas is pumped out of the ground and electricity is mostly generated using a mix of fossil fuels like oil, gas and coal. These are all natural supplies, which are costly to get hold of, and more importantly, in limited supply.

Despite there being a limited supply of fossil fuels, the technology to find and extract them has advanced significantly and has meant that there is no shortage of gas and electricity.

The limited supply of fossil fuels could impact prices if the gas and electricity companies were looking very far ahead into the future, but in the short-to-medium term, supply should not be a factor.

Global conflicts

Wars in oil-rich countries and conflicts between countries over gas pipelines can impact wholesale prices. For example, wholesale gas prices in the UK have spiked when supplies in Ukraine, Iraq and Syria have been threatened in recent years.

For the most part, these spikes have been temporary, and the supply of gas and electricity has remained constant in the UK throughout these conflicts, so it isn’t the ultimate factor.

UK energy providers

There are some arguments that energy providers could afford to keep prices low but instead choose to maximise profits by raising prices. However, the industry regulator Ofgem aims to provide transparency in the way the sector prices its gas and electricity. Ofgem also aims to keep the market competitive to ensure that consumers get the fairest price possible.

You can go to the Ofgem website to see how much profit suppliers made each year.

To some degree all of the above arguments could have some impact on your energy prices, but consumers are able to take back control by switching. By comparing energy prices you can switch to a cheaper provider and ensure that energy gas and electricity suppliers have to stay competitive to retain their customers.

What makes energy cheaper?

Because energy suppliers have to keep the cost of their standard variable tariffs within the price cap, their prices can drop when the cap rate is reduced. This has been the case for the last three price cap reviews - where the price cap rate has fallen, suppliers have been forced to drop their prices too. It's important to remember though that the price cap only applies to suppliers' standard variable tariffs, with most fixed deals being much cheaper to start with.

Another element is competition. Energy suppliers need your custom to be profitable. If their customers leave because there's a cheaper energy provider or one with better service, then they lose out.

Comparing energy prices and switching your energy provider is one of the easiest ways of getting cheaper gas and electricity bills. Suppliers are always trying to win customers from their competitors by offering cheap deals.

Will gas and electricity prices rise in 2020?

Ofgem's energy price cap rate has already been set for the period between October 2020 and April 2021.

Because most suppliers set the price of their standard variable tariffs very close to the cap rate, it's unlikely their prices will change until the next cap level is announced in February 2021. However, Ofgem has already warned that it's likely the price cap will rise at that time.

If the price cap rate is increased, we will probably see suppliers raising their prices from April 2021.

It’s also possible that any increases to suppliers’ costs could be passed down to customers in their energy bills, as long as the rates don't exceed the price cap.

Energy suppliers are always looking to make a profit but many will want to avoid the bad publicity of raising their prices first. However, what happens is that when one supplier announces a price rise, others are likely to follow shortly after.

It's a good idea to compare prices from energy providers and see if you can switch to a cheaper energy deal before any price rises happen. Remember that you're very likely to find a cheaper fixed deal if you're currently on your supplier's standard variable tariff.

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