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Britain is watching yet another crisis unfolding at the moment and this time it’s on energy bills.

That may sound a tad hyperbolic but there is a very strong chance that the energy price cap – the only thing keeping a lid on household energy costs – will rocket 50 per cent in April.

Analysts at Cornwall Insight forecast that the average domestic dual fuel price cap tariff, the pricing people move to by default when fixed deals end, will rise to £1,925 a year – up £648 from £1,277 now.

Keeping warm: The energy price spike is likely to lead to bills shooting up by 50% on average for those on standard price cap dual fuel tariffs, says Cornwall Insight

Keeping warm: The energy price spike is likely to lead to bills shooting up by 50% on average for those on standard price cap dual fuel tariffs, says Cornwall Insight

The next revision arrives in autumn and they suggest on current data that the price cap could then climb to £2,255 for winter 2022-23.

If you’re anything like me, energy bills will feel like a painful monthly expense and one that you really aren’t looking forward to rising by £54.

And trying to switch won’t do you any good, the only deals on offer are fixed price ones way above the price cap level.

Nonetheless, like me, many This is Money readers will be able to grudgingly stomach the hike and feel it as just another part of the current cost of living squeeze.

Others, however, will be among the millions of people for whom this is going to be a real problem.

Warnings that rapidly climbing energy costs will lead to many vulnerable customers potentially having to choose between heating and eating have been arriving thick and fast for some time – and have stepped up since the start of the year.

According to National Energy Action, the April price rise could take the number of UK households living in fuel poverty from 4million to 6million.

The only silver lining is that the rise comes just as the warmer months arrive, but Britain’s springs (and summers) have an unfortunate habit of not always being that warm. Meanwhile, the energy price spike is expected to have got worse by the time the nights draw in again 

No amount of future plans to better insulate our homes, or energy saving tips – be they useful ones or of the daft ‘do star jumps and cuddle your pet’ variety – are going to bridge the gap between already high prices and the even bigger bills on their way.

The Government therefore needs to quickly come up with a plan for how it is going to help struggling households.

No amount of future plans to better insulate our homes, or energy saving tips – be they useful or of the daft ‘do star jumps and cuddle your pet’ variety – are going to bridge the gap 

And it needs to include measures that can give immediate relief, not ambitious talk about transforming our energy sector.

The latter is vitally important for the transition to greener energy, but the moment for creating extra gas storage, better regulating fly-by-night energy firms, and not being so reliant on overseas supplies has passed.

Now is the moment for working out how we help poorer pensioners and financially vulnerable households through the energy price spike.

As a wealthy developed nation we believe in having a financial safety net and making sure people’s homes are adequately heated and they aren’t sitting there in the cold and dark is part of ensuring a decent minimum standard of living.

The tricky question is what do we do? Because there is no magic bullet here.

There has been plenty of talk of a VAT cut, which seems like an imminently sensible move, but the tax is only 5 per cent on energy bills and Cornwall Insights reckons this would shave just £90 on average off dual fuel bills.

Critics of a VAT cut say this would also help wealthier households. But I would argue that’s a red herring: there is a lot to be said for the odd universal benefit and a nation that hands out Winter Fuel payments to pensioners both rich and poor shouldn’t worry too much about a temporary VAT cut for all.

Other options, according to Cornwall Insight in New Scientist, include deferring recouping costs for failed suppliers, which would also save about £90, moving green levies to general taxation (£160), and deferring payment of energy network costs (£330).

Meanwhile, either direct financial support to customers, or loans to suppliers to mitigate energy price rises could both be worth about £500 off bills.

These two are the big guns that could be wheeled out, but would cost the most money.

Longer-term we need a much better plan for Britain’s energy security than our laissez-faire, fill your boots, it’ll be grand way of thinking 

The former could be targeted only at the more financially vulnerable – although measuring that is hard in itself – with the extension of the existing Warm Home Discount payments and a big bump up from their £140 level.

The latter would controversially involve giving private sector companies money, which seems both an odd idea and a tough sell to taxpayers, but it is increasingly seen as having some merit, according to an FT front page report this week.

Under this idea, the government would give energy suppliers payments when wholesale gas prices rose above a certain level, in return for them not passing that on to customers, thus softening hikes and smoothing prices.

A kicker to make it more palatable would involve energy firms somehow returning money to government when prices traded below a certain level.

Whether any of these initiatives – either at the cautious or bold end of the scale – goes ahead remains to be seen – and we may get a package of them.

Something needs to be done though and longer-term we need a much better plan for Britain’s energy security than the laissez-faire, fill your boots, it’ll be grand way of thinking that has dominated the recent past.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.


The expected energy price cap rise in April could raise the number of fuel poor households by 525,000, new estimates have revealed.

The number of homes with at least one dependent child, that struggle to meet rising energy bills, is likely to rise from around 1.58million to 2.1million in April, according to charity National Energy Action.

Ofgem’s price cap is due to increase by as much as £600 from its current level of £1,277 as wholesale prices continue to soar, fuelling the energy crisis and leading to increased bills. 

However, experts say there are changes that could be made to ensure prices decrease and households aren’t left with sky high bills they can’t afford.

Those in fuel poverty, with at least one dependent child, may rise to 2.1m as of April this year

Those in fuel poverty, with at least one dependent child, may rise to 2.1m as of April this year

National Energy Action is calling on the Government to expand eligibility for the Winter Fuel Payment from just pensioners to include 2.4million working age, low income households across the UK, providing a £300 payment.

It added the Warm Home Discount scheme, which provides eligible households with a £140 discount on their bill, should also be expanded to provide guaranteed access to more working age households who often miss out because they might not know about the scheme or the resources overall are far too limited.

Peter Smith, director of policy and advocacy, said: ‘It’s heart-breaking to see the number of children who could be in fuel poverty if there is a massive energy price cap rise in April. 

‘It will be an exceptionally grim time for families, in particular, for single parents. 

‘The Government can help alleviate the levels of debt that families have accrued during this crisis and through the pandemic, through no fault of their own.

‘These targeted steps can help offset some of the worst impacts of the crisis for low-income families. 

‘We hope any interventions will be announced soon and relieve some of the huge anxiety and worry the likely April rises are already causing’.

Experts at energy analysts Cornwall Insight added the focus of policy makers on short-term solutions to rising energy prices is risking the long-term sustainability of the energy sector and leaving the public vulnerable to increasing costs.

It believes current solutions, including the price cap, only attempt to deal with failings in the existing energy market design and only delay risks and increased costs or, at worst, increase them.

To future proof the sector, safeguard against continual consumer price hikes and protect the wider economy, Cornwall Insight has identified three areas that should be examined as a long-term response to the crisis:

1. Reforming the wholesale markets so they will better respond to volatile gas driven balancing costs as the world moves away from fossil fuels

2. Developing a better understanding of the changing inter-relationship of wholesale prices with consumer costs and determining the fairest route for recovery of costs over time

3. A concerted communication exercise that explains to the public the muti-generational return on investment that underpins net zero

Experts have suggested a number of changes the Government could make to help households

Experts have suggested a number of changes the Government could make to help households

It wants these three areas to be addressed in further detailed policy work from the Government.

This includes adopting a sustainable approach to achieving net zero, maintaining commitments and the UK’s reputation for stable, competitive markets and creating justifiable and equitable financial impacts on households and businesses in the long run.

Gareth Miller, chief executive officer at Cornwall Insight, said: ‘The current energy crisis is of economy wide concern, having a potential impact on business competitiveness, general inflation, and household affordability.

‘It is vital the magnitude and speed of actions match the scale of risk faced by the economy from the current situation and that attentions turn away from quick fixes, and instead focus on large scale reform of the energy system.

‘It is not helpful for government to keep pointing to the default tariff cap when pressed on what action it is taking. 

‘The cap will not protect consumers from increases in gas and power prices in the long run.

‘Certainly, the cap has delayed the burden of these costs to consumers, but they will face them anyway as the default tariff cap rises in a lag to the rise in gas and power prices.’

Miller says consumers must remember the default tariff represents Ofgem’s view of a ‘fair’ price for energy.

Therefore, if it is rising, this suggests the regulator thinks that an appropriate response is for suppliers to be able to charge this rate to consumers.

He adds: ‘If the costs of supply are rising but deemed fair, but the impacts on households will create hardship, this cannot conceivably be dealt with through the energy bill or market mechanisms. 

‘At that stage, the Government should attempt to alleviate pressure on vulnerable households through the tax and welfare system.

‘In any event, to avoid repeats of these issues in the coming years, we need to look again at how wholesale markets price energy, as the current system was designed for a different supply mix.’

Experts say whilst the short term solution is important, there needs to be long term change

Experts say whilst the short term solution is important, there needs to be long term change

Further suggestions from Cornwall Insight include reconsidering the strategy for buying and storing gas as well as the balance between importing from abroad and the benefits of using the UK’s own resources. 

This is particularly important as where the UK gets gas from is irrelevant so long as it sticks to a declining usage as the country moves to net zero.

Miller added: ‘These activities are by no means easy and will require upfront investment on top of levies and costs already being paid by consumers. 

‘It is essential that the Government is open and honest with the electorate, about the profile of costs but also the accumulation of benefits of net zero.

‘There should be some acceptance of what is controllable and what isn’t, and what are the uncertainties that may change the trajectory as we make progress.

‘The immediate focus is on the real crisis about to impact households in the here and now. However, we urgently also need to look to long-term reforms if we are to avoid lurching from winter crisis to winter crisis in the years to come.’

How did the energy crisis start? 

The crisis began in August. It was sparked by a number of factors, but ultimately was due to the lack of natural gas being produced, as well as an increase in demand.

Demand rebounded quicker than expected after the global pandemic, but reserves were slow to refill over this summer with supply from Russia lower than predicted. 

As a result of this, wholesale prices started to rise with suppliers being charged much more for their gas.

They, in turn, then had to charge their customers more to cover the extra costs.

Whilst many had already hedged their bets and bought enough supply for a year in advance, meaning they were able to continue serving their customers, other providers had not done this.

This meant they were being charged the new, higher rate and could not afford it.

A total of 25 suppliers have collapsed since August, representing half of those in the market. 

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.


HSBC could change mortgage affordability checks to reflect rising cost of energy bills and its detrimental impact on household finances

  • Lender considering stricter tests for borrowers, according to reports
  • This could affect the size of the mortgage they can borrow
  • Gas price crisis has driven up cost of living for many households
  • Higher bills could potentially affect their ability to pay a mortgage  










A major mortgage lender is considering imposing stricter affordability tests on borrowers in response to the rising cost of living.

HSBC could alter the way it calculates the size of the mortgage households are able to borrow, according to the Sunday Telegraph.

This would take into account the huge rises in energy bills in recent months, which have driven up outgoings for many households.

Energy bills have risen significantly in recent months, increasing the burden on households

Energy bills have risen significantly in recent months, increasing the burden on households

This additional cost could potentially affect their ability to pay a mortgage.

The cost of energy bills has risen hugely over the past few months, due to a global crisis in the supply of natural gas.

The chief executive of Energy UK has said that bills could rise by as much as 50 per cent in the spring, when Ofgem will review its energy price cap. It currently sits at £1,277.

When considering an applicant for a mortgage, banks take into account their monthly income and outgoings, including energy bills, to make sure they can afford the repayments.

They often use an algorithm to determine what size mortgage a customer can afford.

HSBC said it would not comment on speculation, but a spokesman added: ‘Our mortgage lending decisions are based on affordability.

‘As a responsible lender, we keep our underwriting criteria under review and our affordability models are refreshed regularly, taking in to account key elements of consumer expenditure.

‘We would always encourage people to have a healthy relationship with their money and keep an eye on their finances, so when it comes to getting a first mortgage or remortgaging their finances are in good shape.’

HSBC pointed to guidance it recently published for customers regarding how to save money on their energy bills.

In a post on its website, the bank suggested that customers could get a smart meter or apply for a government support scheme.

It also suggested switching energy supplier, despite switching being at a record low. 

At present, many customers will not save any money by doing this, as dropping on to a default tariff is often cheaper than signing up to a fixed deal with a new supplier. 

This is because default tariffs are protected by Ofgem’s price cap.  

Although it is not clear what HSBC’s potential stricter lending criteria might be, tightening regulations would appear to be at odds with recent plans from the Bank of England.

In December, it announced that it would consult on whether to remove the rate rise stress test that banks must impose on mortgage borrowers, which would make it easier to get a bigger loan.

The Bank will consult on scrapping the rule which requires applicants – whatever the initial rate they are applying for – to prove they could pay their lenders’ higher standard variable rate of interest, plus 3 per cent.

The affordability test, also known as a reversion rate, is designed to check that borrowers could still meet their mortgage payments in the event of a rate rise.

Mortgage experts have warned that doing so would also send house prices even higher than they are already. 

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The Government has received a fresh appeal for urgent help for older people facing unaffordable increases in energy bills.

Give the elderly on the lowest incomes £500 payments and cut 5 per cent VAT from April until at least the end of the year, the charity Age UK urges ministers in a new letter warning of a mounting crisis.

Older people are already rationing food and energy use, and are too worried to use their oven and living on soup and sandwiches instead, it says.

Appeal for help: Age UK has sent two letters to the Government in recent months warning of a crisis for elderly people facing soaring energy bills

Appeal for help: Age UK has sent two letters to the Government in recent months warning of a crisis for elderly people facing soaring energy bills

The move follows a call by former Pensions Minister and campaigner Ros Altmann for an emergency winter manifesto to save the lives of older people. 

Age UK cites experts and industry data forecasting that energy bills could spike by up to 50 per cent this spring, and hit an average £2,000 a year after the price cap is reassessed in April.

It claims financial support for older people during the colder months has remained broadly unchanged for years and is nowhere near enough to match the scale of the current problem.

A government spokesperson says: ‘We are taking decisive action to help more than 11.4million pensioners with the cost of living by providing winter fuel payments of up to £300 per household.

‘This is on top of wider support which includes billions of pounds for households via the energy price cap, warm home discount scheme, cold weather payments, household support fund, and freezes to alcohol and fuel duty.

Are you elderly and anxious about energy bills? 

 Age UK is urging older people to call its free national advice line on 0800 169 65 65 before turning the heating off or down.

Its staff will check you are receiving everything you are entitled to, including pension credit and attendance allowance.

Find out more about pension credit here, or call Age UK which will help you apply for help that includes cold weather payments.  

Age UK adds that energy providers have a duty to offer support if people are struggling with bills or debt, and you can ask about an affordable repayment plan.   

What if your supplier has gone bust? Find out what to do here. 

Read more about dealing with soaring energy bills here. 

Scroll down for energy saving tips to help cut costs. 

‘Domestic fuels such as gas and electricity are already subject to the reduced rate of 5 per cent of VAT.’ Read more from the Government about what it is doing to help below.

What has Age UK told the Government?

The charity has sent two letters to the Government in recent months warning of a crisis for elderly people facing soaring energy bills.

This week’s letter, sent to the Business Secretary Kwasi Kwarteng and Work and Pensions Secretary Thérèse Coffey, calls for immediate action to protect vulnerable older people from the cold this winter.

It says the potentially devastating impact of the escalating crisis will be nothing short of catastrophic for many older people without intervention.

Age UK adds: ‘The letter underscores the need for longer-term thinking about how older people with the least ability to pay can be protected from energy price rises in the future.

‘The unprecedented hike in wholesale energy prices will be totally unmanageable for those living on low fixed incomes – many of whom have few, if any, savings to fall back on.

‘Older people are typically at home more than younger age groups and feel the cold to a much greater extent.’

Caroline Abrahams, charity director at Age UK, went on: ‘Older people, particularly those living on low fixed incomes, urgently need reassurance from the Government that they can afford to keep warm when low temperatures demand it, without going into debt – something most dread and will do anything to avoid.

‘Many older people are well practiced at making a small pension go a long way, but that won’t be enough to protect them from the impact of rising household bills and soaring energy costs this time round.

‘We are already hearing utterly heart-breaking stories from older people.

‘This isn’t a crisis that’s arriving in the spring, it’s one that’s here already for many older people because their fear of unaffordable bills is driving them to not even try to stay adequately warm this winter.’

What elderly people say about energy bills

Susan told Age UK: ‘We only put heating on now in the morning and before we go [to] bed, we just wear lots and lots of layers.

‘My daughter has brought us weighted blankets to use in the lounge to keep us warm. I have severe osteoarthritis that is affected by the cold and my husband has chronic obstructive pulmonary disease. He is 73 and struggles with the cold.

‘I am 94 years old with heart failure arthritis etc and feel the cold all the time. I am housebound and spend a lot of time in my bedroom 

‘We no longer make meals that use the gas oven and just use hob to heat up beans and soup, otherwise we make sandwiches.

‘We were already struggling the past couple of years, but with the huge rise in the cost of living including food, petrol and cleaning products, we are finding ourselves in desperate times, it is so scary.’

Paulene said: ‘I am 94 years old with heart failure arthritis etc and feel the cold all the time.

‘I am housebound and spend a lot of time in my bedroom as it is warmer than the living room as I am scared what my next year’s outstanding bill will be. I don’t have the heating on very high.”’

Stephen says: ‘I’m already stressed and not putting heating on. My plan ends end of November and my direct debit increases from £59 to £75.

‘Lord help us all come next April with another round of energy increases on energy, water council tax. We will neither be able to eat or heat.’

What does the Government say about energy bills?

The current reduced rate of VAT already costs £5billion a year. Higher energy prices will increase the cost of this relief.

Freezes to alcohol and fuel duty and the reduction of the universal credit taper and increase in work allowances alone provide over £4.2billion of support per year.

This is on top of other support for living standards including:

– The Household Support Fund is worth £500million and will support millions of households in England with essentials over the coming months

– The Warm Home Discount which provides a £140 rebate on energy bills each winter to over 2.2million low-income households

– The Cold Weather Payment which provides £25 extra a week for poorer households when the temperature is consistently below zero.

– Winter Fuel Payments which are provided to over 11.4million pensioners – £200 for households with somebody who has reached State Pension age and is under age 80 or £300 for households with somebody aged 80 and over.

– Saving 15 million households £100 a year on average since 2019 through the Energy Price Cap

– Increasing the National Living Wage

The Energy Price Cap will remain in place at least till the end of 2022 to protect 15million customers and ensure they pay a fair price for their energy.

The price cap applies to default and standard variable tariffs. This means that any consumer who has come to the end of a fixed term tariff, has moved to a new home, or has been moved to a new supplier as part of the Supplier of Last Resort process will be protected by the price cap as long as they don’t actively choose another tariff.

The setting of the level of the price cap is a matter for Ofgem. Ofgem make clear that their methodology takes account of wholesale prices observed over several months. Their consultations are on issues that they have already recently outlined publicly.

The Government remains committed to seeking to legislate to extend the energy price cap beyond the existing longstop date of December 2023, when parliamentary time allows. It continues to reflect on the price cap’s effectiveness and will take this into account in the design of any future cap.

Energy saving tips that could reduce bills 

Grace Gausden, of This is Money, compiled 20 tips here and below are the top five. 

1. Turn devices around the home off standby, or onto idle mode. Doing so could save you £40 a year on your bills.

2. Draught proof gaps around windows, doors and floorboards by fitting foam strips, plastic seals or brushes. Seal gaps between floors and skirting boards with a simple sealant bought from any DIY store. This could save you £30 a year.

3. Turning the lights off when leaving a room everytime could help you save £14 a year.

4. Use your washing machine on a 30-degree cycle instead of higher temperatures, an action that could save you £10 a year.

5. Only boil the water you need in your kettle, saving £8 a year.

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.


Ovo Energy has faced widespread criticism after it sent an email of ‘energy saving tips’ to SSE Energy customers, a firm it owns, including advising them to cuddle pets to stay warm.

Other ‘tips’ included telling customers to keep the oven open after cooking and to perform star jumps. 

It comes at a time when energy prices are at record highs with costs expected to surge even further, thanks to increasing wholesale costs, with many struggling to pay their bills. 

Now Ovo has apologised for the incident, saying it is ’embarrassed’.

There are a number of energy saving tips that can help homes save over the course of a year

There are a number of energy saving tips that can help homes save over the course of a year

An Ovo Energy spokesperson said: ‘Recently a link to a blog containing energy saving tips was sent to customers. We understand how difficult the situation will be for many of our customers this year.

‘We are working hard to find meaningful solutions as we approach this energy crisis, and we recognise that the content of this blog was poorly judged and unhelpful. We are embarrassed and sincerely apologise.’

While Ovo’s tips were less than practical and subsequently faced backlash from consumers, there are still many energy saving tips consumers can put into practice.  

This is Money has spoken to Energy Helpline, Uswitch and the Energy Saving Trust, to find out how households can really save energy – and cut costs on their bills at the same time.

Much of it is common knowledge, but with bills rising, it is always useful to have a refresher: 

1. Turn devices around the home off standby, or onto idle mode. Doing so could save you £40 a year on your bills. 

2. Draught proof gaps around windows, doors and floorboards by fitting foam strips, plastic seals or brushes. Seal gaps between floors and skirting boards with a simple sealant bought from any DIY store. This could save you £30 a year. 

3. Turning the lights off when leaving a room everytime could help you save £14 a year.

4. Use your washing machine on a 30-degree cycle instead of higher temperatures, an action that could save you £10 a year.

5. Only boil the water you need in your kettle, saving £8 a year.

6. Effective insulation of your hot water cylinder is important. Even if you have thin spray foam or a loose 25mm jacket, you can benefit from increasing the insulation to a British Standard Jacket 80mm thick. This could save you £20 a year. 

Energy prices have soared in recent times with costs expected to increase even further

Energy prices have soared in recent times with costs expected to increase even further

7. Keep your shower time to four minutes. Doing so could save you £45 a year.

8. In the same vein, swapping one bath a week for a 4-minute shower could save you £7 a year. 

9. Fit an aerator onto your existing kitchen tap to reduce the amount of water coming out without affecting its effectiveness. This is a small gadget with tiny holes – they attach to the spout of taps and are cheap and easy to install. This could save you £14 a year. 

10. Only run your dishwasher when it is full to reduce the amount of water you use. Reducing your dishwasher use by one run per week for a year could save you £10 a year. 

11. Similarly, only wash your clothes in your washing machine when you have a full load. Reducing your washing machine use by one run per week for a year could also save you £10 a year. Wherever possible, reduce the temperature at which you wash at, a drop from 60 degrees to 40 degrees, for example, will make a difference. 

12. Avoid using a tumble dryer for your clothes. Instead, dry clothes on racks inside where possible or outside in warmer weather. This could save you £40 a year. 

13. Turn your a thermostat down 1 degree and save £80 a year.

14. In a home without any heating controls, installing and correctly using a programmer room thermostat and thermostatic radiator valves could save you £85 a year.

Turning your a thermostat down 1 degree could save you £80 a year, energy experts say

Turning your a thermostat down 1 degree could save you £80 a year, energy experts say

15. If you have an open chimney, draught-proofing your chimney when you’re not using it could save around £20 a year.

16. If you replace all the bulbs in your home with LED lights, you could save £30 a year on your electricity bills.

17. Fit curtains as well as blinds as this prevents cold windows from cooling down the room. Curtains are a great option for preventing heat loss – remember to close them at night when it’s colder and open them again when the sun comes out to let the heat back in. 

Keeping your curtains or blinds closed after the sun sets will reduce the amount of heat that escapes from your home through your windows, by as much as 25 per cent.

18. Bleed your radiators regularly as this can reduce your radiators from having cold spots and leaving you without warmth.

19. Keep your radiators obstruction-free as objects that are in the way can absorb some of the heat from your radiator – and one of the biggest culprits for this is the sofa.     

Anything up against your radiator will prevent it from working as effectively, and reduce the benefit you feel in your home, as the furniture absorbs the radiating heat.

If you can’t practically keep your radiator clear, just give it some space to breathe, and even pulling your settee a few inches clear will make a significant difference. 

20. Fill up your freezer: Your fridge and freezer is one of the biggest drains on your electricity usage, but there are ways to ensure both run as efficiently as possible. You want to keep your freezer full, as this means less energy is required keep it cold.

If you are nearing your big shop time, and items have dwindled, then fill up some bottles of water and pop them in, which works just as well in keeping your freezer working more efficiently.

Unlike your freezer, your fridge needs space to keep it working optimally. Make sure there is space for the cold air to circulate, especially around the top and the sides of the fridge.

What is the energy crisis? 

The crisis began in August. It was sparked by a number of factors, but ultimately was due to the lack of natural gas being produced, as well as an increase in demand.

Demand rebounded quicker than expected after the global pandemic, but reserves were slow to refill over this summer with supply from Russia lower than predicted.

As a result of this, wholesale prices started to rise with suppliers being charged much more for their gas.

They, in turn, then had to charge their customers more to cover the extra costs.

Whilst many had already hedged their bets and bought enough supply for a year in advance, meaning they were able to continue serving their customers, other providers had not done this.

This meant they were being charged the new, higher rate and could not afford it.

A total of 25 suppliers have collapsed since August, representing half of those in the market. 

Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.


Supplier’s cold comfort: Vulnerable households need accurate energy bills not exercise tips, says VICTORIA BISCHOFF










Oh dear Ovo. The nation is facing an energy crisis that could cause the average bill to sky-rocket to an alarming £2,000 a year.

More than two dozen power firms have gone bust, and ministers are frantically poring over ways they could cushion the blow of looming price hikes, such as removing VAT on bills, boosting winter fuel payments and delaying tax rises.

Without urgent intervention, millions of vulnerable households could be forced to make the devastating choice between buying food and heating their homes.

So it is mind-boggling that a major supplier could be so detached from reality to think it appropriate to send customers an email with ‘simple’ energy-saving tips such as having ‘a cuddle with your pets and loved ones’, eating ‘hearty bowls of porridge’ and ‘doing a few star jumps’.

Feeling the heat: Complaints about energy suppliers are at a record-high and it is evident some billing systems are just not fit for purpose

Feeling the heat: Complaints about energy suppliers are at a record-high and it is evident some billing systems are just not fit for purpose

A spokesman for Ovo Energy has since apologised for its poor judgment. But its embarrassing error should serve as a wake-up call to all energy suppliers. 

As we report, the way many firms treat their customers is nothing short of a disgrace. Complaints are at a record high and it’s clear some billing systems are just not fit for purpose.

Companies may not be able to control wholesale prices. But, given customers are worried sick about how they will afford their bills this winter, firms could at the very least ensure the demands they dish out are correct.

Instead, time and again, we hear from readers who have been hit with shock statements wrongly claiming they owe hundreds or even thousands of pounds.

And when they try to challenge these, they are forced to spend months chasing to get the mistakes fixed. 

Even customers with smart meters — which were supposed to guarantee that you only pay for the power you use — are struggling to get accurate bills.

Many of these errors pre-date the current crisis. So it’s high time that energy watchdog Ofgem investigated the issue of shambolic customer service in this industry.

In the meantime, firms must make sure customers receive monthly statements so they can avoid racking up large debts.

Investment fears

Ouch. My investment portfolio has taken a battering since the start of the year, after several technology-heavy funds plummeted in value. 

Worried that I was over-exposed, I used Hargreaves Lansdown’s handy ‘portfolio analysis’ tool to get an exact breakdown of where my savings were invested.

The pie chart results suggest my money is nicely diversified among different sectors and countries.

So, for now, I am doing my best to ignore the alarming red minus numbers and will stick to my regular investing strategy in the hope that my funds bounce back.

To panic and sell now will only result in real cash losses. But this has served as a prudent reminder of the risk of being too invested in any one industry.

Some investment portfolios have taken a battering since the start of the year, after several technology-heavy funds plummeted in value

Some investment portfolios have taken a battering since the start of the year, after several technology-heavy funds plummeted in value

Premium palaver

It has taken weeks of listening to tedious hold music to get through to Esure to update my card details and challenge my home insurance renewal quote.

For the first time ever, my premium had actually gone down — by an unimpressive £2.86. 

But a quick search online suggested there were better bargains to be had. A spokesman for Esure says more than a fifth of its staff are on sick leave, which is why call waiting times are longer than usual.

Yet, as no one picked up until after January 1 — when rules were introduced to stop insurers offering cheaper deals to new customers — it meant I lost much of my haggling power. With just two days to go until my policy expired, I had little choice but to stay put.

I’d be interested to hear if any readers have bartered down their car or home insurance premiums since the New Year. Write to me at the email address below.

Mixed blessings

Finally, a hearty pat on the back to Virgin Media O2 for being the only major mobile provider not to bring back costly roaming charges for customers travelling in the European Union.

If only the firm would stop charging home movers unfair exit fees of up to £240 if they cannot get its broadband service at their new property, too.

v.bischoff@dailymail.co.uk

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