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Why are gas prices so high and what is happening to fuel bills? Why are gas bills so high and what's the energy price cap?
(21 days later)
Householders in the UK will find out in the next few weeks how much their gas bills are likely to increase in the coming year. Electricity and gas bills for a typical household will go up by £693 a year in April, a 54% increase.
The energy regulator is due to announce the new energy price cap - the maximum amount that suppliers can charge in Great Britain. The government says financial support will help cover some of the rise.
It's expected to rise steeply, because global wholesale prices have gone up so much. How much will my energy bill go up?
What's going to happen? Around 18 million households on standard tariffs will see an average increase of £693 - from £1,277 to £1,971 per year.
Every six months, Ofgem, the energy regulator, reviews the maximum price that suppliers in England, Wales and Scotland can charge domestic customers on a standard - or default - tariff. Around 4.5 million prepayment customers will see an average increase of £708 - from £1,309 to £2,017.
This is called the energy price cap. The amount your bill will go up depends on how much energy you use.
About 15 million households saw their energy bills increase by 12% when it was last updated in October. Energy bills won't rise immediately for customers on fixed rates, but many are likely to see a significant increase when their deal ends.
The next review is due at the beginning of February, and the new cap will come into effect in April. Industry predictions suggest gas prices could go up by as much as 50%. Ofgem: Check if the energy price cap affects you
There is a separate energy market in Northern Ireland, with two gas suppliers, and prices have risen sharply for consumers there too. What is the energy price cap?
Why have prices been rising? Bills are going up because the energy price cap - the maximum price suppliers in England, Wales and Scotland can charge households - is being raised.
There's been a worldwide squeeze on gas and energy supplies over the past year. Energy firms can increase bills by 54% when the new cap is introduced in April.
As a result, wholesale gas prices have risen to unprecedented levels. At the end of December, they hit a new record of 450p per therm, which experts think could take average annual gas bills to about £2,000 next year. Prices are expected to rise again in October.
Reasons for the increase include: What help can people get?
a cold winter in Europe in 2020/21, which put pressure on supplies and, as a result, meant stored gas supplies dropped The government says it will offer extra help worth a total of £350 - just over half the increase facing a typical household:
a relatively windless summer meant it was difficult to replenish those supplies April: People in council tax bands A to D in England will receive a one-off £150 discount. This will apply to about 80% of homes
increased demand from Asia - especially China - for liquefied natural gas October: Customers in England, Scotland and Wales will receive a £200 rebate on their energy bills. They will have to repay this at £40 a year for five years, starting in April 2023
There are a number of technical and geopolitical issues at play as well, which mean many countries across Europe are grappling with the same problems. In England local authorities will also have access to a £150m fund to help lower income households living in higher council tax properties. It will also help households in bands A to D who already don't pay council tax.
However, the UK is hit relatively hard-hit because it is one of Europe's biggest users of natural gas. Around 85% of homes have gas central heating, and it also generates a third of the country's electricity. GOV.UK: Check your council tax band
Storage capacity in the UK is also lower than in some other European countries. The warm house discount scheme will be expanded, to cover three million households. It offers low income households a one-off annual discount on their electricity bill, and was worth £140 in 2021/22.
What effect has this had in the UK so far? Because the council tax measures only apply in England, £565m will be given to other UK nations to fund equivalent help.
Since wholesale gas prices started to spike, more than 20 retail energy suppliers have collapsed in the UK. The Northern Ireland energy market is separate, but the government said £150m would be available to support households there.
This is largely because the energy price cap prevented retailers from passing on higher wholesale prices to their customers. The government ruled out scrapping the 5% VAT rate on household heating bills, as it said this would disproportionately help wealthier households.
Several smaller companies, with fewer reserves, could not weather this. Ofgem: Help with your energy bills
Failed firms include Bulb Energy, with 1.7 million customers. Because of its size, it was put into "special administration", and is now run by the government, through Ofgem. How do energy prices affect the cost of living?
Nearly four million customers have been affected. Many households saw their energy prices rise when their supplier went bust, and they were switched over to a more expensive deal with another supplier. More households are expected to find themselves facing fuel poverty - meaning they spend a disproportionate amount of their income on energy.
The way fuel poverty is measured varies around the UK.
In Scotland, a household is in fuel poverty if more than 10% of its income is spent on fuel and its remaining income isn't enough to maintain an adequate standard of living.
Based on this measure, the Resolution Foundation think tank expects the number of homes facing "fuel stress" across the UK to treble to 6.3 million after April. It says pensioners and people in local authority housing will be hit hardest.
It warns UK households are facing a "cost of living catastrophe".
Food prices are also rising, and an increase in National Insurance in April will leave millions facing higher tax bills.
The Bank of England has put up interest rates for the second time in three months to try and slow price rises.
Why are prices rising so quickly?
Four things that are going up in price and why
What are interest rates and why do they matter?
Why have gas prices gone up?
A worldwide squeeze on energy supplies has pushed the price of gas prices up to unprecedented levels:
a cold winter in Europe in 2020/21 put pressure on supplies and reduced the the amount of gas stored
a relatively windless summer in 2021 made it difficult to generate wind energy
increased demand from Asia - especially China - put pressure on liquefied natural gas supplies
The UK is relatively hard-hit because about 85% of homes have gas central heating, and gas generates a third of the country's electricity.
Why have energy firms collapsed?
When wholesale gas prices spiked, many energy suppliers collapsed - affecting millions of households.
This is largely because the energy price cap prevented them passing on all of their increased costs to customers.
When their supplier went bust many households were switched to a more expensive deal with another supplier.
What can I do if my energy supplier goes bust?What can I do if my energy supplier goes bust?
Can the government intervene to keep prices lower?
The government faces calls from energy companies, the opposition, and even some of its own MPs, to do more to prevent prices from rising too much.
Suggestions include:
scrapping the 5% VAT rate on household heating bills
suspending environmental levies which fund renewable energy schemes
a windfall tax on North Sea gas and oil producers
increasing the number of people eligible for the warm homes discount plan, which currently offers a one-off payment of £140 to those in receipt of certain benefits
How can I protect myself from rising prices?How can I protect myself from rising prices?
In the past, consumers have been encouraged to shop around when energy bills rise. In the past, consumers have been encouraged to shop around when bills rise.
But at the moment better offers - including fixed deals - are simply not available. But at the moment better offers - especially fixed deals - are not available.
People already on fixed deals are advised to stay put.People already on fixed deals are advised to stay put.
Instead of searching for a cheaper deal, householders are being encouraged to improve the energy efficiency of their homes. Other households are being encouraged to improve the energy efficiency of their homes.
The Energy Saving Trust says that simple changes to our homes and habits could offset the current price rises. The Energy Saving Trust says simple changes to our homes and habits could offset the current price rises.
How are rising energy prices affecting business?
Many companies face a considerable rise in their bills. That could mean they have to:
reduce or pause production - or even cease trading - which could cause job losses
pass their increased costs on to customers through higher prices
Energy-intensive industries are particularly exposed, but the problem affects every company that has to pay energy bills - even if it is just to heat an office or shop.
Firms call for help over surging gas prices