What is going on with Gas?

Date posted:
28th September 2021
4 minutes

The wholesale price for gas in the UK has gone up 250% since January this year and by 70% since August. The price increase is not only having a big impact on energy suppliers in the industry, but on individual householders who are managing their home energy bills.  

This can be a really worrying and confusing time for customers, not only to understand the situation and its causes, but also to know what to do about managing their bills. 

In this really practical piece, Georgina Patel, our Decarbonisation Strategic Leads explains 'What's going on with gas' at the moment, and signposts to some practical help our team can offer. 

Where does UK gas come from? 

The UK produces its own natural gas which is piped from the North Sea and the Irish Sea to refineries in the UK; this makes up around 44% of the supply. 

A further 47% comes through long distance pipelines from Europe - mainly Norway, Netherlands, Belgium, and Russia. The remaining 9% is imported as liquid natural gas (LNG) transported by ship from around the world, mainly from Qatar. 

Why have prices gone up? 

Wholesale energy prices fell to historic lows during the first half of 2020 due global pandemic lockdowns. As the world re-opened, the global demand for gas increased sharply however a combination of pressures on supplies have resulted in soaring gas prices, including: 

  • Backlog of maintenance on power plants resulting in energy production downtime 

  • Lower levels of renewable energy generation from wind turbines due to low wind levels 

  • Competition from other countries for global shipped LNG supplies 

  • Shut down due to fire of a major power cable linking electricity supplies between the UK and France. 

  • Political tensions in parts of the world impacting the provision of gas. 

How will it affect my energy bill? 

85% of homes in the UK use gas for heating and hot water so any increases wholesale prices will ultimately be reflected in household bills. 

The UK energy regulator OFGEM, sets a maximum price per kilowatt-hour (kWh), or unit of electricity and gas, that a suppliers can charge customers on a standard tariff. This is called an ‘energy price cap’ and is reviewed every six months. The most recent review has resulted in a new, higher energy cap being introduced which will come into force from 1 October. It is estimated that the higher energy price cap will impact around 15 million households in the UK who will see an increased in bills. It will include households who are: 

  • On a standard variable tariff. This can sometimes be called a ‘default,’ ‘flexible,’ ‘standard’ or ‘variable’ tariff. 

  • On a pre-payment meter. 

Households on fixed tariffs will be unaffected at the moment, but when the fixed period ends, it will be highly unlikely to find a similar deal to replace it. The impact of the price rise for people who are currently on a fixed rate will come when the fixed contract ends or if they are transferred to a new supplier if their existing supplier collapses.

What are energy suppliers doing? 

Energy suppliers are limited on how much of the wholesale gas price rise they can pass on to customers due to the energy price cap. This has proved too much for some companies in recent weeks, with the following UK suppliers collapsing to date, including: 

  • HUB Energy (9 August) 
  • PFP Energy (7 September) 
  • MoneyPlus Energy (7 September) 
  • Utility Point (14 September) 
  • People’s Energy (14 September) 
  • Avro Energy (22 September) 
  • Green Supplier Limited (22 September) 
  • Igloo (29 September)
  • Symbio (29 September)
  • Enstroga (29 September)
  • Daligas (14 October 2021) 
  • Pure Planet (13 October 2021) 
  • Colorado Energy (13 October 2021) 
  • Goto Energy (18 October) 

It is likely that more companies could follow in the coming months. 

What should I do now? 

Check your energy bill, if you are on a standard variable tariff, use comparison website such as U-Switch to check if can switch to a fixed tariff. Unfortunately, there are few cheap deals currently available on the market. 

If you remain on your current standard variable tariff and are struggling to pay your bills, check with your own energy supplier as they are likely to have support packages or payment options available for you, based on your situation. 

What help can Halton Housing offer me? 

Our Welfare Benefit & Money Advice Team are on hand to help any customers who are struggling with high heating costs.  We will focus on helping with any emergency heating needs and then look to make the best out of your income to cover the extra costs of heating your home.    

  • We can help with energy efficiency support to reduce your bills via our Energy Project Plus partners. 

  • We can arrange a demonstration on how to use your heating control effectively to make central heating work better for you. 

  • We can help you access any warm home discounts you may be eligible for. 

  • We can support you get the best tariff from energy switching services that meet your needs. 

  • We have access to a limited number of emergency fuel vouchers to help those in dire need. 

  • If you are in debt with your energy supplier we can help set up affordable repayment plans. 

If you are a Halton Housing customer, you can contact the team for support by emailing welfare@haltonhousing.co.uk or call 0151 510 5024.

What happens if your energy supplier goes bust? 

The energy regulator OFGEM will ensure you’ll always have an energy supply. This guide explains in detail what to expect if it happens to you, providing the following assurances: 

  • Customers will continue to receive gas or electricity even if the energy supplier goes bust. Ofgem will move your account to a new supplier, but it may take a few weeks. Your new supplier should then contact you to explain what is happening with your account. 

  • While you wait to hear from your new supplier: check your current balance and - if possible - download any bills; take a photo of your meter reading. 

  • If you pay by direct debit, there is no need to cancel it straight away. Wait until your new account is set up before you cancel it. 

  • If you are in credit, your money is protected, and you'll be paid back. If you were in debt to the old supplier, you'll still have to pay the money back to your new supplier instead.

If you are currently on a fixed tariff and your energy company goes bust, you will be put onto a tariff run by the new supplier. This will be called a ‘deemed’ tariff, which simply means you haven’t chosen it – it’s been allocated to you. It won’t be identical to your former tariff. 

For more information see what if my energy provider goes bust

Written by

Georgina Patel

Georgina leads on our decarbonisation and sustainability agendas in our goal towards achieving Net Zero - whether it's retrofitting our existing homes or ensuring the new homes we build meet the required standard.

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