Ofgem Announce Price Cap Increase of 54%

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TCD Energy | LNPG’s Only Energy Consultancy Partner

 

The Price Cap increase will affect standard variable tariff and default tariff customers who haven’t switched to a fixed deal, and those who remain with their new supplier after their previous supplier exited the market.

Only savvy customers on ‘fixed-rate’ tariffs are protected from price increases. The energy price cap has historically been updated twice a year and tracks wholesale energy and other costs and is supposed to stop energy companies from making excessive profits, ensuring customers pay no more than a fair price for their energy. Under the price cap mechanism, energy companies will be allowed to pass on these higher costs from April 1st when the new level takes effect.

Moving forwards, Ofgem plans to update the price cap more frequently than once every 6 months in exceptional circumstances, to ensure that it still reflects the true cost of supplying energy. This is no surprise, as the soaring wholesale costs of gas are unlikely to decrease in the near future. This planned change gives suppliers a mechanism to be able to increase their tariffs on a more frequent basis and of course pass on their costs to customers.

Customers on standard variable tariffs and default tariffs who haven’t switched to a fixed deal, and those who remain with their new supplier after their previous supplier exited the market will be impacted.

When the increases take effect from 1st April-22, it’s likely a typical customer on standard variable tariffs and default tariffs will see costs rise over 50%.

What are the 2 main causes of the soaring energy prices?

  1. We’re still far too reliant on gas (most of it imported) to heat our homes and generate electricity, especially when we need power at short notice. 39% of Great Britain’s power still comes from burning gas. Global gas prices have reached a 13 year high. Strong post-Covid industrial demand across China has raised prices in Asia, so Liquified Natural Gas (LNG) cargoes are currently choosing Asian gas hubs over European ones, raising prices here.
  2. Supply from Russia is significantly lower than usual as well, leaving gas storage across Europe only 55-60% full which is 33% lower than the 5-year average at this time of year. This, combined with significant gas and nuclear outages in the UK, and too few UK wind turbines to generate power from low wind levels have led to more gas, and even coal, being used for power production. This is pushing already rising wholesale gas and electricity costs to record levels.
 

Who should be taking immediate action now?

If you operate any of the below property strategies and currently have in-place gas and electricity supplies on deemed tariffs, fixed tariffs coming to an end or standard variable rate tariffs, then we can assist you in mitigating unnecessary costs.

  • HMO or Serviced Accommodation providers
  • Student Accommodation Providers
  • BTL investors who provide ‘bills included’ as part of their AST
  • Any commercial / business premises
 

What’s the Solution?

Put simply, the solution is to move to a ‘fixed business energy” contract.

All businesses exercising the above property strategies, or those with business premises could reduce the risk of the impending energy price hikes by transitioning to a fixed business energy tariff for their business(es). Often HMO and SA businesses have in place ‘residential or domestic’ energy supplies.

Technically speaking, business energy supplies should already be in place to avoid falling foul of the energy suppliers’ terms of contract, but aside from that issue, transitioning to a fixed business energy supply means the price you pay for your energy won’t change for the duration of the contract, which is usually between one and three years.

It guarantees there will be no surprises should the energy market go through a period of sudden change, enabling businesses to make accurate budget projections, providing stability and peace of mind. If you already have a business energy contract but it’s a standard variable tariff (and up for renewal in the next 12 months) or a default tariff, then we can still help you transition to a fixed business energy” contract.

It’s highly likely that as well as protecting your business from the risk of increasing energy prices, a fixed business energy tariff will be more cost-efficient for your business than any domestic tariff available.

Being set up with a domestic energy supply (regardless of the contract terms), won’t stop you from transitioning to a fixed business energy tariff. We make the whole process seamless and painless. Also, if you already have a business energy supply in place, but this is up for renewal within the next 12 months, then we can also likely provide support to mitigate unwarranted price increases against your energy supplies.

 

Next Steps

Please don’t hesitate to email us at: info@TCDEnergy.com or call us on 0333 335 5200.

TCD Energy are the only Trusted Business Energy Consultancy Partner for the LNPG and we’re ready to assist you. We’ve been receiving a steady influx of enquiries from LNPG members since the partnership was announced and helping many members to get to grips with their energy arrangements.

Gain peace of mind that you are on the best possible deal based on your consumption and business size instead of worrying about your energy bills being too high or what impact the price cap review will have on your energy costs.

TCD Energy are more than happy to undertake a free no-obligation appraisal of your current arrangements to identify any areas for improvement.

 

About TCD Energy

TCD Energy is the complete utility solution for your business, providing an unrivalled customer experience and ongoing support. As a fully independent consultancy, TCD Energy has access to real-time pricing from over 20 business energy suppliers so we can ensure your business secures the most cost-efficient set-up. We don’t have preferred suppliers and our aim is to ensure you get the best possible deal.

Not only are we experts at securing the best possible energy tariffs for your business but we specialise within the property sector. We speak the same language and understand what our clients need from us. TCD Energy are your single point of contact for any questions or queries you may have in relation to your energy and water supplies. We specialise in helping clients that have built large portfolios to appraise their current arrangements and identify opportunities to optimise.

Reducing your operating costs is one of the best ways to improve your profit. When you outsource your energy management to TCD Energy, you can get back to running your company instead of spending your time reviewing utility contracts and tariffs yourself.

Our team look after you throughout the term of your supply contract and constantly monitor the market to help you avoid price surges on your renewal. Crucially, we never lock you into a contract directly with us. If you stay with us, it’s because you want to. We have 99% customer retention, and we want to build long-term partnerships with our clients.