It’s not secret that energy prices have been rising rapidly over recent months.
Most of the companies known as the “big 6” have increased their prices heavily, some by as much as 10%. So what is the reason for this sudden increase?
After Ed Miliband’s election promise was…
If Labour win the next election, we will freeze energy prices until 2017
That’s all well and good but this outburst could actually be the reason that all of the energy companies are raising their prices now.
They don’t want to be caught out if there is a price freeze from 2015 until 2017 because of a government policy so they have no option but to increase the prices beforehand. They’ll then probably look to increase their prices afterwards, too!
They want to increase them sufficiently so that it doesn’t lose them any money over that two year period which means steep increases now. They have to take into consideration how much wholesale gas and electricity prices might increase over that period which is a complete shot in the dark but they’d rather charge too much than too little.
Another reason for the increase in prices of gas and electricity could simply be for increased profits. The shareholders of these large corporations want to make as much money as possible so increasing their revenue is one way to do it.
They have tried to justify that their costs have increased and therefore they need to increase prices but in one report it was actually stated that over the past year wholesale prices have only risen by 2% whereas the costs to the consumer have risen by 9%, on average.
The government impose additional taxes on energy bills because they need to raise money for investing in renewable energy sources and they also use the money to help those who are poorer insulate their homes in order to reduce their energy bills.
The government have stated that they are looking at ways to reduce the green taxes which would pass the savings onto customers throughout the UK. However, the energy companies are still free to raise the prices of energy as they see fit without any intervention from the government. This is why Labour’s election promise was so well received by a large number of people in the UK who are really feeling the squeeze this winter, and will shortly be feeling the freeze too!
Ways to Save
There are many ways to save on your energy costs, but some of the easiest to implement are listed below:
- Insulating your hot water tank could save up to £60 per year
- Have showers instead of baths to use less hot water
- If you have an immersion heater don’t leave it on all the time
- Switching halogen light bulbs to LED ones can save money
- Using energy efficient light bulbs can save up to £55 a year
- Turn all appliances off from the mains instead of leaving them on standby
If you are worried about soaring energy costs you have every right to be. These increases are set to make many households far worse off this winter. If you are able to switch energy suppliers now might be the time to do so if you can find a suitable tariff which suits your needs better. It’s best to look at a comparison site to see what is available.