Fuel cost crisis: What you need to know about energy prices in 2022

This February, energy prices became headline news as energy companies were permitted to increase bills from April 2022 by a huge 54%. Households on standard tariffs will, on average, see increases of £693 per year, with those on prepayment systems set to see an average increase of £708 per year. The increase you see will depend on your energy consumption.

The news didn't stop there, as price increases are likely to increase further in October 2022. These are changes that we'll all face, and shopping around for a better deal is unlikely to produce any positive results as the effects are so universal. Although energy costs are increasing worldwide, the UK is particularly badly affected because so many of our homes are heated through gas: around 85% of homes in the UK have gas central heating, and we rely on gas to generate about a third of our electricity, too.

In this article, BHE addresses some common questions around the recent energy pricing news, and we set out our top 5 tips for improving energy efficiency in the home to keep a handle on your household's fuel outgoings.

Why are energy prices increasing so much?

Energy bills for your home will increase because the maximum price that energy suppliers are able to charge you - the energy price cap - is going up.

But why are energy prices on the rise at such a rate? A number of factors are responsible:

1. Greater demand globally for gas has increased prices worldwide to levels we've not seen before.
2. Europe had a cold winter in 2020/21, resulting in greater demand for gas supplies and reducing the amount of gas stored.
3. 2021's summer featured little wind, meaning that wind energy was harder for our large wind farms to produce and pushing people back to reliance on gas.
4. Asia - particularly China - has increased its demand on gas sources, reducing liquefied natural gas supplies.
5. The UK is highly dependent on gas for both heating and production of our electricity.

You're bound to have noticed that the cost of living is going up overall. Anything from food and skincare products to furniture, clothing, appliances and household goods is seeing an increase as a result of increased worldwide energy costs making manufacturing more expensive, higher shipping costs and increased fuel costs for transportation.

It's inevitable that these costs are passed to the consumer, and energy and fuel consumption is at the heart of many reasons for increases.

Will my fixed energy tariff deal be affected?

If you're on a fixed rate tariff, your energy bill won't increase until you come to the end of your current deal. As you then look for a new deal, you'll notice the increase, which is likely to be substantial.

The industry advises that you stay on your current deal for as long as you can.

You might also have seen many smaller energy companies going bust in recent months. That's because, when the wholesale price of gas went up, those companies were unable to pass the increased costs onto their customers due to the energy price cap. Larger companies can cushion the blow for longer, but the price cap needed to go up to help those companies survive.

Is there any help available?

Help initially comes in the form of a council tax reduction. Households in council tax bands A-D in England will receive a £150 one-off discount in April 2022.

A £200 rebate on energy bills will also be made to customers in England, Scotland and Wales in October, but this is repayable at £40 per year over 5 years. The government is introducing a fund to help lower income households living in properties with higher council tax bands, and is expanding the warm house discount scheme.

How can I stay in control of my household energy costs?

Check out our top 5 tips for improving energy efficiency in your home.

From making sure your boiler is regularly serviced to smart thermostat controls and central heating powerflushing, there's plenty you can do to take control of your home's heating costs.

BHE's gas & central heating services to help you stay energy efficient

BHE is Bolton's complete gas, central heating and plumbing expert, serving Bolton, Bury, Wigan, Lancaster, Morecambe and the South Lakes (and everywhere in between!). Our engineer team helps homeowners run energy-efficient, gas safe and warm homes with services including:

• New boiler installation, installing modern, energy-efficient boiler models which can save you £££s
• Boiler servicing and repairs, identifying issues, preventing breakdowns and dealing with leaks or energy wastage quickly
• Installation and set up of Hive smart thermostat controls
• Central heating installation and refurbishment
• Installation and replacement radiators and valves
• Central heating powerflushing
• Installation and set up of new room thermostats and controls

Book an appointment with BHE today!

Request a quote or find out more about our services.