This week, the government has announced financial help for households whilst the regulator Ofgem published its planned rise to the energy price cap — which Good Energy is exempt from.
As the energy crisis continues, we are acutely aware of the impact it is having on many households all over the country. We’re here to make sure you understand what is happening. Here’s what we know about the latest news.
What is the energy price cap?
The energy price cap was introduced in 2019 to protect customers who do not switch, as some big suppliers were found to be overcharging loyal customers. It’s a maximum figure that applies to energy suppliers’ default tariffs, set by Ofgem based on its calculations of the costs of supplying energy. It is assessed and set every six months, though following yesterday’s announcement this may be changing.
Does it affect Good Energy customers?
Good Energy was one of three suppliers granted a ‘derogation’, or exemption from the price cap, because we support renewables above and beyond other suppliers. You can read more about our exemption here. This means that customers on our standard SVT tariff are not affected by the price cap. Customers on fixed tariffs are also not covered by the cap because the price cap only applies to suppliers’ default tariffs. Their prices are set until their fixed periods end, and if they do not actively chose another tariff their prices are covered by the price cap. For all of our customers, we always set a fair price which is reflective of our costs.
What is the update to the cap?
Yesterday’s update was that the energy price cap is rising 54%, from £1,277 for a typical household dual fuel bill to £1,971. This is higher still for prepayment customers, moving to £2,017
What measures have the government announced?
The Treasury has confirmed several new measures to soften the blow of energy price rises.
The first is a £200 bill-credit ‘loan’ for all domestic electricity customers in October, funded by the government and repaid over five years.
The second is a council tax rebate of £150 for all houses in band A-D, beginning in April. Also funded by central government but administered by Local Authorities.
The third is an expansion to the eligibility of the existing Warm Home Discount scheme, which is a one off £140 payment to vulnerable customers.
The chancellor also reiterated a planned £3 billion for energy efficiency measures, which we have since seen confirmed includes a planned increase to the Energy Company Obligation (ECO).
The ECO forms part of the green policy costs on everyone’s energy bills, though despite this rise the total of these costs will go down slightly, and down 4% as a proportion of a typical bill. This is thanks to the ‘Contracts for Difference’ scheme, which has supported renewable generators for several years by providing a fixed price for their generation. As these fixed prices have been below the wholesale cost of electricity, these renewable generators are now paying back, making them one of the few things helping keep bills down.
Are these measures the right ones to address the crisis?
The government support offered to households is certainly better than nothing. We have advocated for a form of government backed loans to smooth the costs of this crisis. But the way this will be implemented seems very un-targeted and lacking a lot of detail.
Will Good Energy customers be given the £200 bill-credit?
We have been frustrated with the lack of engagement from government on this crisis. Like other suppliers, we have been calling for action for several months, and now this announcement seems quite rushed and lacking detail. We don’t have all the information yet but will keep our customers up to date.
However, consumer champion Martin Lewis, who has had the opportunity to question the chancellor on this, has confirmed that every bill will reduce by £200.
We are also keen to hear from you. Please do contact us if you have any questions or have thoughts yourself on the measures.
What can I do if I am struggling with my bills?
We will always do what we can to help customers who are struggling. Please contact us if you are having difficulty making a payment. You can email the team on email@example.com or call us on 0800 254 0000
I want to help others
We have many amazing and generous customers at Good Energy and know that lots of you are looking for ways to help others in this crisis. Good Energy recommends National Energy Action, the national fuel poverty charity, as an excellent way to provide support to those who need it.