We’re keeping UW prices as low as possible following the price cap change

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4 February 2022 - On 3 February 2022, the Government announced a series of measures to help reduce the impact on customers facing rising energy costs. Unfortunately, there will still be a significant increase in energy bills from 1 April this year, but support is there to help customers including a £200 discount on electricity bills in the autumn. 

Like all other suppliers, we’re affected by the energy crisis and the increase in the Government's price cap. With wholesale energy prices - the cost suppliers like us pay to buy energy - hitting record highs, we can't avoid passing these rises onto our customers. But we’re still keeping prices as low as we can following the price cap change.

UW is the only supplier offering customers on variable energy tariffs a guaranteed discount of up to 5%* below the price cap set by the Government. 

Despite this, we know these changes will be difficult for many UW customers. We’ve tried to explain the situation below, and give you answers to some questions you may have. 

If you’re concerned you might struggle to afford any price changes, we’re here to help. You can find advice here.

What is the Government’s energy price cap?

The energy 'price cap' is the maximum an energy supplier can charge customers on variable tariffs for a unit of energy. Variable tariff means your prices can change with reasonable notice, unlike fixed price tariffs where your prices can’t change for the length of your contract.

The price cap is reviewed twice a year by the Government’s energy regulator, Ofgem, and a new price set for 1 April and 1 October.

You can read more here.

Why are energy prices rising?

The Government set a fair price based on their understanding of the costs energy suppliers face in the wholesale market. They review this price cap regularly to ensure it’s still fair.

As wholesale prices have risen to an all-time high, the Government is adjusting the price cap to ensure suppliers can fairly reflect the price at which they buy their energy in the charges they apply to customers. Unfortunately, due to the large increase in wholesale costs, suppliers have been buying energy at a higher price than they were allowed to sell it for. So the Government has had to increase April’s price cap to a rate that is considerably higher than on previous occasions.

The reasons for the dramatic rises in wholesale prices are complex, but some of the factors affecting them are:

  • Competition in international gas markets – for example, droughts in China have affected hydropower generation, and have led to higher demand for gas.

  • Unseasonal low temperatures causing greater demand for energy. 

  • The UK’s low gas reserves, due to infrastructure changes and greater demand.

  • Significant proportions of UK electricity are being generated by gas power plants, so changes to wholesale gas costs also affect electricity production.

  • Over-reliance on gas from Russia, which is providing lower volumes than expected. 

  • Unforeseen outages at UK power stations.

  • High carbon-offsetting costs for fossil-fuel generation. 

  • Lower wind output than typical, affecting energy production on wind farms.

What are wholesale prices?

This is the price suppliers, like UW, pay to buy energy.

I’m a UW customer – am I affected?

If you’re on one of our variable tariffs or have a prepayment meter, then the answer is yes. 

If you’re on a fixed tariff you won’t be affected during your agreed fixed period.

What do I need to do?

Nothing. We’ll contact customers throughout February and March to let you know how your prices will be affected.

When will prices go up?

Price changes will take effect from 1 April 2022.

When will I see changes on my bill?

You’ll see the change in your May bill for all charges after 1 April. 

If you pay by Budget Plan, the amount you pay each month will be reviewed during the coming months, so your payments won’t change right away. We’ll be in touch if they need to change.

Why is the standing charge going up too?

Energy bills are made up of a combination of fixed costs and ones that change based on how much you use. The daily standing charge is how fixed costs are passed on to energy customers. It covers things like the cost of renting the meter on your wall, to maintaining the network of overhead cables and pipes that brings gas and electricity to your home. These fixed costs have increased due to a number of factors, including the cost of moving customers who were with a failed energy supplier to a new supplier, and increases in the cost of the green levy and the warm home discount.

Are all suppliers raising their prices?

All suppliers have been impacted by soaring wholesale prices and will be increasing prices for customers that are on tariffs affected by the price cap.

Am I in good hands with UW energy?

The simple answer is yes, you’re in good hands. UW isn’t at risk of going bust. Firstly, the structure of our wholesale energy agreement means that the cost of the energy we buy is protected against pricing volatility, both today and in the future. 

Secondly, we’re more than just an energy provider. We have a unique multiservice offer that also spans broadband, mobile and insurance. This generates a number of different revenue streams and means we’re not solely reliant on energy. 

And finally, we’ve always taken a long-term approach to pricing while still offering competitive tariffs to all our customers. We’ve spent the last 25 years building a stable and sustainable business, and we plan to be around for many years to come.

What other ways can I save with UW?

We recognise that some UK families are facing a serious challenge. But you’re in good hands with UW. We’re the only supplier offering customers on variable energy tariffs a guaranteed discount of up to 5%* below the price cap set by the Government. 

Here are a few other ways we can help families to save a little more each month.

What additional support is available to me?

If you’re having difficulty paying for your energy, it’s important you speak to us for support. You can find information on the support you can receive on the Help pages below:  

The legal bit

* 5% discount applies to customers who take our Double Gold bundle (energy, mobile and broadband), with lower discounts applied to our other service bundles. Our Energy Price Guarantee only applies to customers on Direct Debit with a credit meter. Contact us to verify at uw.co.uk/contact-us

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