But the energy price ceiling is about to jump – and it will be something of a leap.
Here’s everything you need to know about energy price ceiling.
What is the energy price ceiling?
The energy price cap is the maximum amount a utility can charge an average customer in the UK per year for the amount of electricity and gas they use.
This prevents supplies that simply pass on wholesale price increases to the consumer.
It was introduced in January 2019.
There are 11 million Britons on standard or variable tariffs that are affected by the price cap.
The current ceiling is £ 1,277, which was set in August last year – an increase of 12 per cent on the previous price.
There is a separate ceiling for households that use prepayment meters.
The ceiling means that if wholesale prices fall, your bills should fall and that if they rise, there is a limit.
However, energy prices have risen in the last six months, which means that the ceiling is likely to be raised – and significantly.
Why are energy prices rising?
Energy prices rose through 2021 due to a combination of factors and the problems are international rather than just affecting the UK.
First, last winter was particularly cold in Europe, both driving up demand and using stored gas supplies.
Demand also rose in China as well as other parts of Asia, while Russian gas supplies were lower than expected.
The burden that the companies have led to the collapse of 27 small businesses, who between them were responsible for more than two million homes.
When does it change?
The lid is set by the energy regulator Ofgem, which is inspected every six months.
The next review is in February, and any changes are expected to be introduced from April 1st.
There are fears that the increase in February could be up to half.
According to Cornwall Insights, an energy sector specialist, bills could rise below the current price cap to £ 1,925 a year when the next revision is announced, a 51 per cent increase.
They also predict that it may increase even more by the following quarterly revaluation in August 2022, unless there is a significant drop in energy prices globally.
Money Saving Expert Martin Lewis said on his ITV show: “There are lots of people out there who can afford the rise and will not like it, but there are also millions of people who will be thrown into fuel poverty who will get close to having that choice between heating and dining. ”
Labor’s shadow climate change and spokesman for the net-zero, Ed Miliband, said: “The government can not just stand and let families be hit by increases in bills of hundreds of pounds.
“Labor has already determined how the government will remove VAT from energy bills for six months, giving families a respite in the winter, and making it a national mission over the next decade to insulate homes to reduce energy bills.”
Centrica CEO Chris O’Shea has informed the public that the energy market “suggests that high gas prices will be here for the next 18 months to two years”.
He added that a 50 per cent increase in bills – to around £ 2,000 – was unlikely to be short-term.
“As we move towards net zero, gas is a major transitional fuel, so when you turn off coal-fired power plants in other countries, there may be more demand for gas,” he said.
“There’s not an abundance of gas that you can just turn on quickly, so I can not say this will be done in six months, or nine months or a year.”
Should I go on a fixed rate?
This is the million-dollar question. Fixed rates have previously been good value for customers, and by changing regularly, many could save money by shopping for the best deals.
But the rise in energy prices led many companies to remove their best rates from the market, while other companies even went bankrupt.
This caused comparison sites like Compare the Market to freeze their comparison pages as there was nothing good to show their customers.
This has now been frozen up and they are once again showing deals.
But it said: “In most cases, fixed tariffs currently offered are more expensive than being on a standard or variable tariff.
“We encourage people to check it carefully before resolving an agreement at this time.”