What does the natural gas crisis mean for UK consumers?
How many people will be affected?
Over 22 million UK homes are connected to the gas grid, with 38% of UK gas demand being used for home heating and 29% for power generation.
Of these, 15 million households use either standard tariffs or prepaid meters. In other words, the bill is protected by an energy price cap, which is the maximum price that a supplier can charge.
Majority of consumers not directly affected Rising wholesale gas prices Most energy companies buy much of their supply months ago and use hedging strategies to prevent short-term price increases from occurring. passed on to their customers.
However, due to inadequate coverage or weak balance sheets, five small suppliers (a total of 570,000 domestic customers) have already closed since early August.
Large companies could also go bankrupt in the coming days, with up to a million customers predicting their suppliers will shut down. Meanwhile, over 40 other small vendors may also fail in the weeks and months to come.
What if a supplier hits a wall?
If the business continues to collapse, the energy regulator Ofgem will automatically transfer affected customers to new suppliers.
Ofgem has already done this for many of its 570,000 customers in five suppliers that have so far failed. Last week, we transferred the 220,000 domestic customers from UtilityPoint to EDF. Ofgem announced Monday the appointment of a new supplier for the 350,000 domestic customers of People’s Energy.
Earlier this month, we transferred over 90,000 customers to British Gas from two failing suppliers, PFP Energy and MoneyPlus Energy.
The transfer may take several weeks, but the supply of gas and electricity will continue until it is completed, when the new supplier contacts the affected customer.
When a customer is transferred, what is called a “deemed charge” will be applied for 6 months. This is usually the standard floating rate for new suppliers.
In the past six months, customers can avoid switching to a different rate offered by the supplier or switching to another company to pay the penalty.
After 6 months, if the client has not moved, the supplier’s standard variable rate will apply.
Gillian Cooper, head of energy policy at Citizens Advice, advised affected customers to “write down meter readings, keep old energy charges and note account balances.”
She added: “Please wait until a new supplier is appointed before canceling the direct withdrawal. This will facilitate the transition.
What does it mean if you want to change?
Consumers looking to save money by switching energy providers will find it nearly impossible as hundreds of transactions are taken off the market, increasing the cost of securing fixed rate contracts.
Several price comparison websites in the UK, including Compare the Market, have suspended energy switching services due to restrictions on the number of tariffs available to energy providers.
Other companies, including uSwitch and Moneysupermarket, offered a fraction of the normal number of switching transactions. The uSwitch website is warning consumers looking for quotes that they may want to wait for more deals, saying rising wholesale energy prices “are affecting the number of deals they can currently offer.” Declared.
Deals still offered through comparison sites polled by the Financial Times require consumers to ‘lock in’ one-year, two-year or three-year fixed-price contracts, most often starting at £ 15. An exit penalty of around £ 100 will be imposed.
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