On Monday 15 November, wholesale energy prices hit their second highest level in at least three years. Low wind speeds were blamed for pushing wholesale energy prices for the peak period between 5pm and 6pm over £2,000 per megawatt hour.
This is only the second time that wholesale prices have reached the £2,000 level since 2018, and rising prices have placed further pressure on suppliers who are continuing to struggle to secure gas and electricity at competitive rates.
Energy crisis is set to continue
Although the news shows us that the UK’s ongoing energy crisis is set to continue through the winter, the good news is that the level reached on Monday is much lower than in September, when wholesale prices reached £2,500 per megawatt hour. Since then, a great number of energy suppliers have gone bust, and some experts believe that other suppliers may fold in the coming weeks and months.
The UK’s energy crisis started in August. Since then, the country’s power grid has struggled with a lack of wind power generation. As a result, the UK has turned to gas-fired power plants and coal in order to make up the deficit.
According to data from Drax Electric Insights, gas-fired power plants were producing nearly 55% of electricity needs on Monday. This is up from a more typical level of 40%. Meanwhile, wind farms accounted for just 4% of electricity needs, which is just a fraction of the average of 21% supplied over the last year.
What does this mean for consumers?
Although wholesale prices are continuing to rise, there’s no need for customers to immediately be alarmed. This is because even though the price of natural gas has climbed steeply, Ofgem’s energy price cap prevents suppliers from passing these costs directly onto customers straight away.
However, although your bills are currently protected by the price cap, you should be aware that some experts predict the cap will rise substantially in April 2022, when it is set to be updated. We’ve previously reported that at this point your bills may rise by as much as £400.
Sadly, you cannot currently run an energy comparison to cut your energy bills at the moment. This is because even the UK’s best energy deals from the country’s best energy suppliers cannot beat the price cap. However, there are steps you can take to ensure you’re not paying more than you need to.
Firstly, if you believe that you’re on the wrong tariff, then speak to your energy supplier and ask them whether you can move to an alternative tariff that better suits your needs. On top of this, following our energy saving tips could save you hundreds of pounds over the course of a year.
Finally, if you’re struggling with your energy bills, then check whether you’re eligible for help. Schemes like the Warm Home Discount Scheme could also save you £140 on your bills, and affordable debt repayment plans and payment breaks are also available.