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What does the natural gas crisis mean for UK consumers?

UK energy renewal

How many people will be affected?

More than 22 million households in the UK are connected to the gas grid, with 38% of UK gas demand used for home heating and 29% used for power generation.

Of these, 15 million households either use standard rates or use prepaid meters. In other words, the invoice is protected by an energy price cap, which is the maximum charge a supplier can charge.

The majority of consumers are not directly affected Soaring wholesale gas pricesMost energy companies buy many of their supplies months ago and use hedging strategies to prevent short-term price increases from being passed on to their customers.

However, due to inadequate hedging or weak balance sheets, five small suppliers (a total of 570,000 domestic customers) have already closed down since early August.

Large companies could also fail in the next few days, with as many as one million customers predicting that their suppliers will go out of business. Meanwhile, more than 40 other small suppliers can also fail in the coming weeks and months.

What if a supplier hits a wall?

If the company collapses further, energy regulator Ofgem will automatically switch affected customers to new suppliers.

Ofgem has already done this for many of its 570,000 customers in five suppliers that have failed so far. Last week, we transferred UtilityPoint’s 220,000 domestic customers to EDF. Ofgem announces the appointment of a new supplier for People’s Energy’s 350,000 domestic customers on Monday.

Earlier this month, we transferred over 90,000 customers to British Gas from two failed suppliers, PFP Energy and MoneyPlus Energy.

The transfer may take several weeks, but the gas and electricity supply will continue until it is complete, when the new supplier will contact the affected customer.

When a customer is transferred, what is called a “deemed fee” will be applied for 6 months. This is usually the standard floating rate for new suppliers.

During the last six months, customers can avoid moving to a different fee offered by the supplier or switching to another company to pay the penalty.

At the end of 6 months, if the customer has not moved, the supplier’s standard variable rate will apply.

Gillian Cooper, head of energy policy at Citizens Advice, advised affected customers to “note 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 this mean if you want to switch?

Consumers looking to save money by switching energy providers will find it nearly impossible as hundreds of transactions are withdrawn from the market, pushing up the cost of fixing to fixed rate contracts.

Several UK price comparison websites, including Compare the Market, have suspended energy switching services due to restrictions on the number of rates available to energy suppliers.

Other companies, including uSwitch and Moneysupermarket, offered a fraction of the normal number of switching transactions. The uSwitch website warns consumers searching for quotes that they may want to wait for more transactions, saying that rising wholesale energy costs are “affecting the number of transactions they can currently offer.” Stated.

Transactions still offered through comparison sites surveyed by the Financial Times require consumers to “fix” to one-year, two-year, or three-year fixed-price contracts, most often starting at £ 15. An exit penalty in the range of £ 100 will be imposed.

What does the natural gas crisis mean for UK consumers? Source link What does the natural gas crisis mean for UK consumers?

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