Your guide to the energy crisis with free FAQ template for your tenants

22 September 2021

Consumers throughout the UK will be worried about the impact the energy crisis could have on their bills or suppliers. Here's your guide to the changes to the Energy Price Cap, government support for tenants, what happens if a supplier goes bust, and free FAQ template to answer your tenants' questions.

The UK has been gripped by an emerging energy crisis: wholesale gas prices have increased by 250% since the beginning of the year, including a 70% rise since August, according to the Oil & Gas UK trade body. Five small energy suppliers have collapsed in September alone and experts have predicted that the industry may shrink to as few as 10 energy suppliers by the end of winter, down from about 70 suppliers at the start of the year. Now, fears are escalating that energy prices could soar to unaffordable levels for both everyday consumers and industry, leading the government to engage in crisis talks with the regulator, Ofgem, and key industry leaders. Here's your guide to the crisis, plus a free FAQ template to send to your tenants about how the crisis could affect them this winter.

Why is there an energy crisis?

A combination of factors have contributed to the current crisis. Demand for gas has soared globally as the world recovers from the pandemic, compounded by a cold winter in 2020-2021 that left gas supplies depleted, with stores at a five year low. Smaller energy companies have warned they'll go out of business if they can't pass on the rising costs to customers, according to the BBC. More than 22 million households in the UK are connected to the gas grid, according to the government, and in 2020, 38% of the country's gas demand was used for domestic heating, 29% for electricity generation and 11% for industrial and commercial use.

What should I say to tenants who are concerned about their energy bills?

Advise them to check who their supplier is and what tariff they are currently on using a recent energy bill. If they are on a standard variable tariff or prepayment meter, they will be subject to the Energy Price Cap increase on 1 October 2021 (see below). If possible, Ofgem recommends "shopping around for a better deal". If they're on a fixed rate tariff, the price per unit of energy used is locked in for a specific period, usually 12 or 24 months, they are probably best to remain on it until the end of their contract. 

Download a free FAQ template to answer your tenants' questions on the energy  crisis

How will the increase to the Energy Price Cap in October affect my tenants?

In 2019, an Energy Price Cap was introduced to protect customers on standard variable tariffs, which is usually a supplier's most expensive tariff, and is reviewed twice a year. The price cap was already increased on 1 April 2021, and will increase again by a further 12% on 1 October 2021. This will affect approximately 15 million households, according to Ofgem. Those on standard variable tariffs paying by direct debit will see an average increase of £139 from £1,138 to £1,277. Prepayment customers will see an average increase of £153 from £1,156 to £1,309.  The government and Ofgem have asserted in a joint statement that the Energy Price Cap will not be suspended.

What happens if my tenants' energy supplier goes bust?

They will not find themselves without power this winter. The government and Ofgem have stated that the current crisis "is not an issue of supply" and "the United Kingdom benefits from having a diverse range of gas supply sources with capacity that can more than meet demand." Instead, Ofgem will appoint a "Supplier of last resort" and customers of the failed supplier will be switched to the new supplier on a new "deemed" contract, with energy supplies will continue as normal as they are switched over.  If the energy supplier goes bust while you have a change of tenancy, you should make a note of the date and meter readings. The supplier appointed to take over supply will be responsible for billing accounts from the day the supplier goes bust. The new supplier will be responsible for ensuring any credit on the account is honoured, while the failed supplier will bill for any owed amounts. 

Failed energy suppliers and their "Suppliers of last resort"

Date

Supplier

Customers

New supplier

22 September 2021

Avro Energy

580,000

Octopus Energy

22 September 2021

GREEN

255,000

Shell Energy

14 September 2021

Utility Point

220,000

EDF Energy

14 September 2021

People's Energy

350,000

British Gas

7 September 2021

PFP Energy

80,000

British Gas

7 September 2021

MoneyPlus Energy Limited

9,000

British Gas

9 August 2021

Hub Energy

6,000

E.ON Next

27 January 2021

Green Network Energy

360,000

EDF Energy

27 January 2021

Simplicity Energy

50,000

British Gas Evolve

Is there support available for poorer households?

Government support is available for low income and fuel-poor households struggling with their energy bills. This includes the Warm Home Discount, which provides eligible households with a £140 discount, and Winter Fuel Payments and Cold Weather Payments, which "will help ensure those most vulnerable are better able to heat their homes over the colder months". The emergency measures that were agreed between government and energy suppliers to support those most in need during Covid-19 will also remain in place this winter.

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