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What’s driving the energy crisis?
For several months, high demand for oil and gas around the world has led to a spike in prices. The war in Ukraine has further exacerbated the trend.
Because the cost of purchasing energy has risen, suppliers (in the UK at least) have dealt with this by charging customers more on their energy bills.
The energy price cap, set by energy regulator Ofgem, determines how much suppliers can charge their customers. At the start of April, this cap rose by 54 per cent.
This cap is expected to soar again in October by around £800, bringing the average yearly bill to £2,800.
Ofgem also recently announced that it would allow the price cap to change every three months to accommodate fluctuations in the energy market.
What is the energy price cap and how does it affect my bill?
Set by the energy regulator Ofgem, the energy price cap is a limit on the rates a supplier can charge for their default tariffs. It doesn’t apply for fixed-term energy tariffs.
Your energy usage will also affect how much you pay – so the cap level isn’t the maximum anyone will pay. Higher usage will mean paying more.
This means limiting your usage can help bring your costs down every month.
What can I do to keep my energy usage low?
One of the most obvious ways to save on heating costs is to only crank up the thermostat when you need it, as well as taking shorter showers (as energy is used to heat the water).
Draughty houses, however, can make it hard for a building to retain heat – so having thick curtains on your windows and keeping internal doors closed is one way of trapping heat.
If you live in private or social housing and claim certain benefits you may be eligible for the Affordable Warmth Obligation, a scheme under which the government helps pay the cost of insulation work or upgrading your heating in other ways.
You can find out more about this scheme, and others you may be eligible for, on the government’s energy advice website.
Another way to keep an eye on costs is to see whether your energy supplier can give you a smart meter – this allows you to see how much you’re spending on a live meter.
Aside from heating, there are a few ways you can keep down the costs of using your oven or stove. These include:
- Putting a lid on your saucepans while cooking
- If you can afford to do so, batch cook meals to get more food out of one cooking session, or cook several things at once when using your oven
- Only boil as much water as you need
- If you have a microwave, cooking food in it can save on energy. You can microwave a potato to bake it in far less time than using the oven, for example
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What help can I get with paying my energy bill?
If you’re struggling to pay your energy bill, your first port of call should be your supplier.
You should be able to negotiate a payment plan which works for you and the supplier should take into account how much you can afford to pay.
Citizens Advice offers a budgeting tool to help you calculate how much you can pay based on your circumstances.
If you can’t reach an agreement or can’t make payments you’ve agreed, the company may install a prepayment meter instead.
If you receive income support, income-based jobseekers’ allowance, employment and support allowance, pension credit or universal credit (while unemployed) you may be able to pay energy bills or debts through your benefits.
This is called “third party deductions” or Fuel Direct and you can find out more about the scheme on the government’s website.
Recipients of benefits may be eligible for other schemes to help pay for heating such as the Warm Home Discount.
Citizens Advice has a list of schemes and grants available for those who need help paying.
The government recently announced extra help for people during the cost of living crisis. This includes one-off payments of varying amounts depending on your personal situation.
To find out more about what you’re entitled to, you can read our run-down here.