If 2018 was the “Year of the Price Rise”, what does that mean for 2019? Could things be even worse for your wallet?
No one can predict the future. However, after observing the energy industry for over 17 years, we have learned what to look out for when it comes to future price hikes. And sadly, many things on the horizon point to the fact that energy bills are going only one way – up. Thankfully, there is a solution – locking in a fixed tariff today could protect you from price hikes tomorrow.
So what is most likely to increase energy bills in 2019?
Wholesale Energy Prices
On a dual fuel energy bill, the cost of wholesale energy makes up the biggest portion of the cost at 36.17%. Naturally this means that fluctuations in wholesale energy costs can have a huge impact on your bills.
The cost of wholesale energy ebbs and flows. Sometimes it is cheaper – but in 2018 major spikes happened – such as when the “Beast form the East” made wholesale energy costs soar as much as 146%.
But even in more usual weather, the cost of wholesale energy – which is expected to rise in 2019 – can make a huge negative impact. It all depends on the marketplace, supply and demand, and the strength of the pound – all of which is uncertain in the year to come.
Less competition due to suppliers who have gone bust
With the cost of wholesale energy on rise, and the price cap coming in, some suppliers are seeing their razor-thin margins closing in on them – which sometimes ultimately leads to them going into administration. Sadly, the market in 2018 was particularly harsh, with 8 suppliers going bust in the span of one year.
Should the negative trend continue in 2019, that means there will be even less competition – and incentive to undercut competitors’ prices. This means that bills may increase in turn.
However, there is no need to fear – should your supplier ever go bust, there is a strong safety net in place to make sure your energy supply, and your money in credit is 100% safe. You can read more about it here.
The “Smart Meter” Roll Out
The smart meter roll out has been fraught with problems.
Suppliers have been given ambitious installation targets by the government for smart meters, so some of them are trying to incentivise customers to get them by offering discounts on the condition of agreeing to an installation. But the technology and the needed engineers has come at cost of millions for suppliers – costs that they are passing on to the consumer.
That said, if you’d like to have a smart meter, you may as well take advantage of certain special deals that some suppliers have set up to incentivise installations – that way you can get the new meter you desire, and bag a bargain as a bonus. Some of these deals could offer you significant savings, and a new meter to boot.
Also, it’s important to remember that a smart meter itself is not what results in savings – rather it’s getting on a good value tariff, and monitoring usage. Ultimately it’s about the customer being smart, not the meter. Virtually all of the cheapest deals are available to people with or without smart meters.
Green energy costs – even for non-green tariffs
Renewable energy has become significantly more affordable in recent years, however it does still add an extra cost to bills – even for non-green tariffs. That’s because Ofgem imposes an obligatory renewable energy payment for suppliers, to fund “government programmes to save energy, reduce emissions and encourage take-up of renewable energy”.
Whilst all of these goals are great for the future of our planet, all investment of course comes at a cost. These green fees make up 9.67% of the average dual fuel bill.
However, the silver lining is that you can still save £100s on energy, and support renewable energy – all you have to do is switch to cheaper tariff.
What can you do to protect yourself from energy price rises in 2019?
Thankfully, it’s simple to fix all of this. All you have to do is lock in a bargain energy deal as soon as possible. It only takes a few minutes, and you can have full confidence that your energy rates will stay low regardless of factors outside your control, such as cold weather or the energy market.
Our average customer saves £129* when they switch energy through energyhelpline. And the sooner you lock in a great deal, the sooner you can rest assured that you will be protected from any price hikes in 2019.
*Calculated against an average UK Big Six Supplier Standard Variable Tariff costing £1,137 a year. Usage for a typical home: Gas 12,000 kWh pa and Electricity 3,100 kWh pa. Payment Method: Monthly Direct Debit. Average savings figure based on all energyhelpline partner and own brand switches in 2018, as of 7 January 2019.