Experts React Against 10% Rise In Energy Tariff & Suggest Alternatives
Among the 28 million households in England, Wales, and Scotland, the gas prices will be capped at 6.24p per kWh and the electricity at 24.50p for the next three months. This means, that from October 1st to December 31st, there will be an increase of 10% from the previous quarter.
This increase in price cap has met with criticisms from the public, and Martin Lewis, the founder of MSE (Money Saving Expert), called it the “pants cap” because much cheaper deals can be made available.
Martin Lewis urged people to do a price comparison and find better deals than this. This article will provide a clear picture of the energy price cap and the surrounding issues, and delve into expert opinions of people like Martin Lewis in tackling this. Also, we will check the alternatives to the energy price cap.
How Does the Energy Price Cap Work?
The energy price cap is calculated by Ofgem, the Office of Gas and Electricity Markets. Various factors like the cost of wholesale energy, network costs, operating costs, and VAT are taken into account while deciding the price.
In theory, this way helps the customers from overpaying for the energy they use. However, taken into effect from this quarter, the annual bill has moved to £1,717, with a rise of £149 from the previous tariff.
Martin Lewis on the Issues with Energy Price Cap
While talking on BBC Radio 4’s Today programme, Martin Lewis said that 85% of people who use price cap should visit a price comparison website to find a better deal. As a competitive market, there are various cheaper annual plans available around.
The high payment is not the only issue. The government has decided to freeze the winter fuel payments system for the poorest pensioners which may cause pressure on vulnerable families. Lewis called this “unfairness in the system”.
Better Deals in the Competitive Energy Market
According to Elise Melville, an energy expert, the cheapest alternative is provided by Outfox the Market, with £162 less than the new price cap. Also, Ovo Energy and EDF Energy offer better prices with a difference of around £150. If you are planning to shift, do a price comparison to find the best one that suits your needs as opined by Martin Lewis.
Are There Any Better Ways to Tackle the Energy Tariff Crisis?
While Martin Lewis criticizes the government for the policies, David Buttress, the CEO of Ovo Energy, proposes to introduce a social tariff. It is similar to the broadband billing system used by the telecom industry.
There should be a discounted energy deal for the poorest users, and equity must be considered as a primary need than equality when it comes to energy. Also, citizens have high expectations of upcoming technology that may create new sources of energy which is cheaper.
Concluding Remarks: When will Energy Prices Go Down?
UK’s power system grabs energy from various sources like wind power, solar power, fossil fuels, and hydro. The government aims to have 90% of the electricity to arrive from low-carbon sources by 2030, but most of the energy is currently received from natural gas.
While the scarcity of natural energy is aligned with the climate crisis, this will create complications in the price, and studies show that the price cap will rise again from January 2025. However, keep in mind that the cap is still smaller than the £2,500 that was billed during the energy crisis two years ago.
At present, a household is spending a huge sum of money on electricity in the UK, and it is higher than in various other neighboring countries. Activists around Europe urge a debate about the future regarding the conservation and fair use of energy without affecting the money flow of the public and the vulnerable.
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