Energy Crisis Explained: What to Do
You’ve likely heard of the recent ‘energy crisis’; talks of energy bills soaring and suppliers going bust. What’s actually happening, and why? Should you switch now? Let’s take a closer look to see how it may affect you and what you can do about it during this energy crisis.
What’s happening to energy prices?
Energy prices fell sharply in the first lockdown. But, with the reopening of the economy amidst the crisis, wholesale energy prices (the prices suppliers pay for the energy they sell to households) have risen to record-breaking levels.
Volatile
It’s now difficult for suppliers to price energy amidst this crisis because by the time it takes to get a customer on a particular tariff, prices may have rocketed again.
Price cap
Suppliers with large numbers of customers on ‘standard variable’ tariffs have been unable to raise the price of those tariffs above Ofgem’s price cap. This limits how much suppliers can charge you per unit of energy and gas.
The price cap was designed to protect customers on these tariffs from being taken advantage of by energy suppliers. However, the wholesale markets have risen at such a pace that the cap has failed to keep up. Price cap-limited tariffs are now the cheapest deals on the market (when they’re usually the most expensive) and many suppliers are making losses during the ongoing energy crisis.
What’s more, this also means there’s a lack of affordable deals on the market in this crisis. Customers used to be able to ‘shop around’ for a cheaper, fixed-rate deal, however, due to sky-rocketing wholesale prices, many are unable to find them. In fact, the cheapest fixed-rate deals are 60% higher than a year ago.
The result
Energy prices are going up – and many suppliers are going bust as a result. Some suppliers have removed their tariffs from price comparison sites, while others have removed the promise to save customers money completely due to the crisis.
What’s happening to energy bills?
From 1st October 2024, Ofgem, the UK’s energy regulator, increased the energy price cap. This meant that millions of households saw their energy bills go up. If you’re on a standard or default tariff and use a typical amount of gas and electricity, your annual bill rose from £1,568 to £1,717, that’s an extra £149 a year. For those on prepayment meters, the cost jumped from £1,522 to £1,669, a rise of £147. And if you use more energy than average, you’ll pay more.
But there’s some good news coming. From 1st July 2025, the price cap is due to fall by around 7%, which means the average household could see bills drop from £1,849 to £1,720 a year, saving about £129. These changes are being made because the cost of buying energy has come down, and Ofgem is adjusting what suppliers are allowed to charge amidst this energy crisis.
Another review of the price cap is expected in October 2025, so things could change again depending on market conditions. In the meantime, it’s worth checking if you can get a better deal on a fixed-rate tariff. And if you’re finding it tough to pay your bills, there’s help available, such as the Warm Home Discount or support from your energy supplier. Making small changes at home to use less energy can also make a difference.
What if I’m on a fixed-rate deal?
If you’re on a fixed-rate deal, your energy bills should stay the same for now. However, when your deal ends, you could see your bills increase due to the fluctuating conditions of the crisis.
Should I switch to a fixed-rate deal?
This presents a dilemma when it comes to switching. If you fix now, you’ll be locking in at a higher rate than the price cap. However, you’ll be protected against future jumps.
Some may prefer to stay on the standard variable tariff in the hopes energy bills will come down. But, there are no guarantees amidst the energy crisis.
What happens if my supplier goes out of business?
There are predictions many suppliers will go bust in upcoming months. However, if your supplier goes out of business, your supply won’t be cut off. Ofgem has well-established processes in place to support suppliers and manage the crisis effectively.
Should it happen, take a meter reading immediately. You don’t need to switch, you’ll be appointed a new supplier in a few days. However, it will be a contract you haven’t chosen. Your energy bills could go up as a result.
Contact your new supplier and ask them to put you on your cheapest tariff. Remember, the option to shop around and switch energy suppliers is still there – you shouldn’t be charged exit fees.
How to reduce energy bills
Certain things, such as wholesale prices, are out of our control. However, there are ways to save money on utility bills by changing habits at home. Some ideas include:
- Getting an eco-kettle
- Turning down the thermostat
- Insulating your home
- Draft excluders
- Using energy-saving bulbs
- Washing clothes at a lower temperature
- Turning off ‘standby’ appliances (they still use energy)
- Upgrading the boiler
Want to do your bit for the planet?
Switching might not be guaranteed to save you money right now, but it could still be worth doing. The recent climate warning couldn’t have been clearer: each of us needs to do our bit to look after the planet. You can help tackle climate change by switching to a supplier backed by renewable energy, even during an energy crisis.
Last Updated: May 27th, 2025
