Energy crisis: What does it mean for you?

Energy prices are in crisis. This is affecting the sectors many of our members work in like the steel industry, which already paid higher energy prices than its European competitors, but it also affects every Community member at home, as you could end up paying more for gas and electricity.

Here’s what you need to know:

Why is this happening?

Energy prices are really high. Gas prices are more than 6 times more expensive than they were at the start of 2021. These high prices are why so many energy companies have gone bust in recent years. Firms have started to pass these high costs onto their customers.

What’s the price cap?

The price cap changes twice a year. The new price cap comes into force in April 2022. The new price cap is 54% higher— £1971 for a typical user — although you could pay more if you use more energy than the average person.

The price cap is calculated based on wholesale prices (that’s the price that energy suppliers themselves pay) over a six-month period.

Price-capped variable tariffs have been the cheapest on the market, with fixed deals more than 56% higher.

Should I get a fixed rate tariff?

Since the energy crisis began last year, experts have been advising people not to switch to a fixed price deal. That’s because it isn’t possible for most people to get a better deal than what they would pay through the price cap.

In the past, fixed price deals often worked out cheaper. But now, because energy prices are so high, the cap is actually forcing suppliers to sell at below cost.

To help with the sums, Martin Lewis offers advice about switching.

You can check for yourself what deals you could get, through price comparison websites. Depending on how much energy you use, you might find a cheaper deal, but to reiterate – this is unlikely.

Unfortunately, you have to weigh up the risks because we don’t know what will happen — prices could fall and fixing now could leave you paying over the odds. Or, prices could rise even further, and when the price cap changes again in October standard tariffs could increase yet again.

What can I do if I’m struggling to pay my bill?

We know that the energy crisis is causing real hardship. There are some schemes available which might help you:

The warm homes discount— Worth £140 a year, this is a one-off reduction on energy bills paid by some energy suppliers, to people on low incomes in England, Scotland, and Wales.  If you get the guarantee credit element of pension credit, you should have received a letter telling you how to get the discount. For others on low income, the scheme is first come first served and you have to apply for it. Check with your energy supplier who will tell you if you are eligible and how to apply.

The money people could get under this scheme is due to be raised to £150 in 2022, and to be made available to more people— about 3 million households.

Northern Ireland winter fuel payment scheme – In Northern Ireland, the winter fuel payment scheme can help with bills. The details are here.

Cold weather payment— Some people on low incomes can get £25 each time the weather drops below 0 degrees for seven days in a row.

Winter fuel payment – This is paid to households with at least one person who is of pension age (over 66) as well as to some people who get legacy benefits. This is not means tested and is paid automatically.

Household support fund – You might be able to get a grant from your local council to help if you’re struggling. Councils have been given £500m to distribute.  You can find out who your local council is here. You’ll need check their website for details of the support they can offer.

Help from your energy supplier— Some energy suppliers offer grants to their customers— check their websites, as companies including British gas, Scottish Power, Ovo Energy, E.ON , E.ON Next, EDF, and Bulb have schemes you may be able to apply for.  The British Gas Energy Trust will also offer grants to some people who are not customers, if eligible.

Help with debt– If you owe money to your energy supplier contact them to agree a payment plan. If you’re struggling with debt, MoneyHelper can help you find free debt advice. We partnered with StepChange to bring you this guidance on dealing with debt too.

What can I do to reduce my bills?

We know that the cost-of-living crisis is a big problem affecting the whole country. However, there are some things you could consider doing to make your home more energy efficient and reduce your bills.  These include;

• Switching appliances off instead of leaving them in standby mode
• Draught proofing your windows and doors
• Turning off lights when you’re not using them
• Always washing a full load and using cooler temperature cycles
• Avoiding using the tumble dryer
• Taking shorter showers, or showering instead of bathing
• Only filling your kettle with as much as you need
• Filling your dishwasher completely before using it
• Insulating your hot water tank, pipes, and radiators

There are also schemes which give people receiving certain benefits support towards a boiler repair or replacement or new insulation.

What is Community doing to support members through this crisis?

Community has been campaigning for the Government to intervene and support both domestic users and energy intensive industries like the steel industry.

We also support the Labour party’s call to cut VAT on domestic fuel bills. The government has not yet agreed to do this. The energy industry has also asked for the government to offer loans to energy companies.

If you are a member of Community and need help or advice, please contact us at help@community-tu.org or on 0800 389 6332.