Home U.K Energy bills face £191 hike as wholesale costs increase for suppliers

Energy bills face £191 hike as wholesale costs increase for suppliers

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Soaring costs have led some gas and electricity suppliers to pull their tariffs from comparison websites in the past week ‑ making it difficult to switch to a cheaper deal, according to Go Compare. There are now just nine deals ‑ four dual and five electric-only ‑ from four providers on its website after 83 offers were pulled last week.

Another comparison site Compare the Market has temporarily suspended offering any energy quotes due to a lack of tariffs.

The mass withdrawal is the result of spiralling wholesale energy costs.

Prices have surged to 11 times the usual fee due to a squeeze in gas supply, low wind speeds and power station closures, made worse by a substation fire in Kent which cut off supplies from France.

Those wholesale prices make up a typical 40 percent of energy bills.

With few options to switch, customers who have reached the end of their fixed-term contract must try to negotiate with their current supplier or face being moved to more expensive standard variable tariffs.

Although these are usually the most expensive deals on the market, householders are protected by the energy price cap, which sets upper limits on how much firms can charge. 

But this borderline stands at its highest ever level after regulator Ofgem pushed the cap up by £139 to £1,277.

HSBC analysts are now warning of a 15 percent increase in bills when the limit is next reviewed in February.

This could potentially push the cap up to £1,468, a further £191 increase.

Joe Malinowski, of TheEnergyShop.com, thinks prices will go even higher. He said: “The simple maths implies that, as things stand, the next level of the cap will increase by around £275-£280.

“This would take the energy price cap, when it is next reviewed and increased, on April 1, 2022, to around the £1,555 mark.

“To put it into context, price-protected standard tariffs would be 50 percent higher than they were two years prior.”

Wholesale gas prices have risen 68 percent in five weeks, while costs are up an estimated 324 percent on this time last year, he has calculated. 

And data from Germany shows wholesale electricity prices have risen 66 percent, up 174 percent year on year.

The surge in wholesale costs also puts pressure on small suppliers.

Utility Point and People’s Energy, with more than 500,000 customers each, stopped trading on Tuesday. Five suppliers have collapsed since August.



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