Responding to the energy crisis

Here's our take on the energy crisis, written by our CEO, Jack Ray.

Last Updated:
15th February 2022

Since the beginning of the gas crisis back in the late summer of 2021, we’ve been closely monitoring the situation with energy suppliers and have been sorry to see a number of suppliers go out of business. We’re constantly asked by customers and clients: “How does the gas crisis affect us?” Here’s our take on the situation.

What is the price cap and who are Ofgem?

If you’re reading this, you’ve likely seen in the news the increase in energy prices by 54%, causing widespread concern about the cost of living. Ofgem are the industry regulator and are able to set a price cap to ensure customers are protected from high energy prices. 

The price cap aims to provide a base level tariff that any home mover would land on when they move into a new home. Suppliers will likely want you to lock into a contracted tariff for a longer length of time e.g. 12 or 24 months, but it’s super important that you’re aware of the difference in price between a contracted tariff and the price cap (standard variable tariff or SVT), as the SVT will most likely be cheaper than a contracted tariff.

What does the increased price cap mean for Billing Better customers?

Our current bills package customers who have SSE as their supplier will remain on their tariffs until June. This tariff is locked in until then and offers a significant saving compared to all tariffs available on the market right now. In the coming months, we will be working with SSE and other suppliers to ensure we have a great tariff to move our customers on to once this tariff expires.

Some of our bills package customers will be with suppliers on the standard variable tariff, for example with Scottish Power or EDF Energy, which again is significantly cheaper than any tariffs being offered by suppliers at the moment. Once the standard variable tariff price increases in April, the energy unit rates for these customers will increase accordingly.

What does this mean for new customers?

As of today (15/02/2022), we’ve updated our energy charges to match the new standard variable tariff which will come into effect in April. This means these prices will remain the same in the coming months and will only become cheaper should we be able to broker a deal with a new supplier in the coming months.

The new standard variable tariff being introduced equates to approximately 28p per unit for electricity and 7p per unit for gas. In real terms, the average two bedroom home signing up to Billing Better from today onwards will now pay £123.54 per month for their energy rather than £99.90 per month.

How does this impact students looking to get their bills set up for the summer?

We’ve received a large number of enquiries from well organised students looking to get their bills sorted for the summer. As mentioned above, we have now updated our pricing which will be the worst case scenario energy pricing for the summer because it reflects the new price cap from Ofgem.

Our plan and aim is always to ensure that our customers are on the best possible rates for their bills. With this in mind, once the energy wholesale prices drop (hopefully in the next couple of months), we will be negotiating the best possible deals with all suppliers to bring the unit rates  down below the new price cap.

To be clear: the quotes we are showing on our website reflect to the worst case scenario as it is in line with the new price cap. If you sign up for Billing Better today for your bills in the summer, you will pay the price you sign up for today or you will pay less if we manage to secure a better deal.

The only way in which the price for your energy bill would increase is if your usage exceeds the amount you are paying each month for your bills.

How does this impact letting agents and landlords?

For our letting agent and landlord clients, the impact can be split into two categories:

1 - Letting Agents using Billing Better to manage changes in tenancy and voids
Our platform will continue to notify suppliers of changes in occupancy. Should you use our void switch programme, we will continue to switch your energy to Scottish Power, who continue to offer a market leading void tariff below the new price cap and 45 days without standing charges.

2 - Landlords and letting agents offering your properties with bills included
Landlords and letting agents paying Billing Better for the bills within their property will have the same impact as our customers as listed above within the sections titled “What does this mean for our existing customers?” and “What does this mean for new customers?”

What options do I have as a home mover?

Unfortunately, because the wholesale prices of energy have increased to higher than the price cap set by Ofgem, it has meant that suppliers are not allowing anyone to switch to them. We are starting to see green shoots of recovery with Rebel Energy starting to take on new sites, but until the wholesale prices drop, as a consumer you are best to stay with your new supplier powering your home and remaining on the standard variable tariff.

What are Billing Better doing to help customers whose bills are increasing?

Unfortunately, the increase cost to energy and to the general cost of living is out of our control, however we are doing as much as we can to help our customers including the following:

Making sure you’re on the best deal - Rather than recommending an expensive, in contract tariff that earns Billing Better lots of money, we’re ensuring our customers remain on the standard variable tariffs with suppliers. Unfortunately, there are a number of bill aggregators / package providers trying to put home movers and students under pressure to sign up to high price tariffs knowing that prices are likely to drop as the weather gets warmer. Home movers, be careful!

Negotiating the best tariffs - Our aim will be to get all of our customers onto the best available tariff in the coming months. It’s in our interest to ensure our customers are on the best deal available and for your bills to be as cheap as possible.

New perks and rewards platform - We’ve been working hard on a new perks and rewards scheme behind the scenes which we’ll be launching in the next month or so. We believe that if used correctly, our perks can save the average home £600 per year through discounts at supermarkets, restaurants, days out and everyday purchases.

Is there a light at the end of the tunnel?

Yes! Kind of… Typically, wholesale prices begin to drop in the spring time as demand for gas drops and it gets warmer, however the reliability of this happening may be less this year because of what is happening politically in Russia, Ukraine and with Brexit.

Our hope is that when the wholesale prices do drop, we’ll be able to negotiate a great new tariff for all of our customers to bring their prices lower than the new price cap. As soon as we’re able to do this, we’ll be updating our customers.

For more information about how wholesale prices have impacted energy suppliers sadly going into administration as well as how the new price cap could impact energy prices, please check out this article from our friends at Hugo App which we feel explains everything really well.

If you have any questions as a partner or customer, please don't hesitate to reach out to me direct using the below details:

All the best,
Jack

Email: jack.ray@billingbetter.co.uk

*Note that this article is based on Jack's opinions based on his industry knowledge and is not intended to act as official advice.