24 September 2021
The wholesale price of gas has increased significantly during 2021. A sharp rise of 70% in August sent shockwaves throughout the industry, causing seven energy suppliers to go bust in two months.
Simply put, these failed energy companies had promised to sell gas to customers for less than it was costing them to buy it.
To understand the UK 2021 energy crisis fully, it’s important to explain how the energy price cap works. The energy price cap is backstop protection from the government, calculated by Ofgem. It applies if you’re on a default energy tariff, whether you pay by direct debit, standard credit or a prepayment meter.
It won’t apply if you:
are on a fixed-term energy tariff
have chosen a standard variable green energy tariff Ofgem has exempted from the cap.
So at the moment, based on typical consumption:
if you’re on a default tariff paying by direct debit the maximum that energy suppliers can charge you is £1,138
Prepayment customers benefit from a price cap of £1,156
And if you are on a fixed tariff, you may be paying more than either of those.
However, the price at which energy companies are buying their gas supply (the wholesale price) has risen by over 250% since January 2021, according to Oil & Gas UK. And because of the Ofgem price cap, suppliers were forced to shoulder the cost.
The price hike is especially bad news for smaller companies. Many tried to disrupt the market with unsustainably low introductory offers, hoping to cover the costs in the long run, but are no longer able to keep up with the skyrocketing wholesale costs.
And it’s not just suppliers who are hit by the 2021 energy crisis. Consumers will feel it too, with the Ofgem energy cap increasing on 1 October 2021 – going up to £1,277 a year for people on default tariffs paying by direct debit and £1309 for Prepayment customers.
Energy wholesale prices go up and down depending on demand – they tend to rise slightly in winter, when people use more energy, and go down in summer.
But, as Sky News reports, a mixture of unforeseen factors have caused the current extreme price surge. In a nutshell, they have risen due to:
The economy opening up after the pandemic, causing an increase demand for gas as more shops and venues open
Low gas storage stocks
High European Union carbon prices
Low liquefied natural gas tanker deliveries, due to higher demand from Asia
Lower than usual gas supply from Russia
A very windless September, meaning that the UK’s wind-power energy output is lower than normal
Gas and nuclear maintenance outages
UW is in a very strong position to weather the storm – our customers can rest assured that not only will our services continue to run as normal, but our prices will also remain competitive.
As our CEO Andrew Lindsay told the Financial Times, “we have a long-term approach to pricing. And the structure of our wholesale energy agreement, means that the cost of the energy we buy is protected against any volatility – both today and in the future.”
More information about our strong position in the 2021 UK energy crisis can be found by clicking this link.
Although the UK has one of the most secure and resilient energy systems in the world, the current crisis has resulted in some smaller suppliers unfortunately going bust in August and September 2021.
To help you check if you’ve been affected, we’ve included a full list of suppliers that have gone bust in the last two months:
HUB Energy (August 9)
PFP Energy (September 7)
MoneyPlus Energy (September 7)
Utility Point (September 14)
People’s Energy (September 14)
Green (September 22)
Avro Energy (September 22)
Don’t worry, if your energy company becomes insolvent, Ofgem will automatically give you a new supplier – you won’t have to do anything. Importantly, your gas and electricity will carry on running as normal.
Here are some other bits of information we’ve collated from sources such as Sky News, The Guardian, the Sun, and BBC:
Any credit you had with the old supplier will be transferred to your new one – Sky News
The new firm doesn’t have to honour the deal you were on with your previous provider – the Sun
Once your new supplier has been in touch, ask them to put you on their cheapest deal. Then shop around and switch if you want to. You won't be charged exit fees – Sky News
While you wait to hear from your new supplier: check your current balance and - if possible - download any bills; take a photo of your meter reading - BBC
It depends on your situation.
If your supplier has just become insolvent, and you’ve been switched to a new one by Ofgem, you might find yourself on a worse deal. In that case, do some shopping around and see if you can find better alternatives.
If you’re with a supplier that’s at risk of becoming insolvent but still operating, it might be worth sitting tight for a little while and see how the situation plays out.
It’s also worth noting that many energy companies pulled their lowest offers off the market on Friday 17 September, ahead of the price hikes. So it’s unlikely that you’ll find anything super cheap.
Overall, the advice being given by Which? and Ofgem is to stay with your current provider for the time being, and see what happens in the coming months.
While it depends on what deal you’re on, it’s very likely that your bills will rise – around 15 million people in Great Britain are predicted to be impacted by the price hike in October, according to the Evening Standard.
Finally a full list of all the current UK energy suppliers who are going bust can be found by reading this article.
No, but Bulb is seeking advice from investment bank Lazard on emergency funding, according to the iNews paper.
Octopus, along with the ‘big 6’ energy providers (British Gas, EDF Energy, E.ON UK, Npower, Scottish Power, and SSE) are set towill be able to carry on providing energy as normal.
Yes, Avro was one of the energy companies to go bust this week, officially going under on 22 September 2021.
As of 23 September 2021, Symbio energy is still operating as normal. However it is on a list of companies that have “failed to pass on the renewable energy subsidies collected from their customers. The inability to cover these basic costs is often a telltale sign of deep financial trouble” reports The Guardian.
The legal bit
*Terms and conditions apply.
20 September 2021 - We understand why recent media coverage of the UK energy market has many people worried. But we’d like to reassure all our customers that we’re continuing to operate as normal and are protected from the pricing volatility many other providers are currently experiencing.
13 August 2021 - It was recently announced that Ofgem's price cap has risen, and energy prices along with it. Here we explain why this has happened, and how these changes affect UW customers and the tariffs they're on.