Commercial Energy

Fixed tariff or variable tariff: your guide to energy charges

Introduction

With so many different energy tariffs available, it can be tricky to know what’s what. Don’t worry though, we’re going to help you understand the differences between fixed and variable energy tariffs.

You may be wondering which option is better for you. This guide will go through the ins and outs to help you understand. 

What is a fixed energy tariff?

A fixed energy tariff is a long-term agreement between you and your supplier. You will pay the same price for electricity or gas for a set period of time, typically three or five years. Fixed tariffs are more expensive than variable ones, but they do provide security against future price fluctuations in the energy market.

Fixed tariffs are often called ‘fixed rate’ or ‘guaranteed rate’ deals by suppliers because they offer greater certainty about your costs over time. However, this doesn’t mean you won’t see any changes to your bill if conditions change – it just means that these changes will be smaller than normal for that period of time.

What is a variable energy tariff?

A variable energy tariff is a type of energy tariff where you pay different prices depending on the amount of energy you use. The most common variable tariffs are seasonally adjusted and dual-fuel (gas and electricity). Seasonal adjustments mean that your bill will be more expensive in winter than summer because people tend to use more heating during those months. Dual-fuel means that you’ll pay both gas and electricity on one bill.

You may think this sounds like a good idea—after all, if the price of energy goes up then so does your bill! But actually, it can sometimes be a bad deal, especially if there isn’t much difference between what your supplier charges for its variable tariffs compared with its fixed ones. With the current energy price rises, this can mean that those on variable tariffs are at risk of higher rises. 

Are fixed energy tariffs cheaper than variable tariffs?

You might think that fixed tariffs would be cheaper than variable ones. After all, they don’t change with the whims of the market. However, there are two reasons why this isn’t always true:

  • Fixed tariffs cost more to provide
  • The cost of providing fixed tariffs is passed on to customers in the form of higher tariffs

Should I switch to a fixed energy tariff?

  • If you’re on a variable tariff, you can switch to a fixed tariff.
  • If you’re currently on a fixed tariff, you can switch to a variable one.
  • So if you are currently on one of these tariffs and want to change then it’s worth looking into whether switching makes sense for you.

Fixed energy tariffs are more expensive but they provide security against future price fluctuations.

Fixed energy tariffs are more expensive but they provide security against future price fluctuations.

Fixed energy tariffs are fixed for a set period of time, typically 12 or 24 months. If you choose a variable tariff, your supplier will keep your bill down by changing the rate according to changes in the wholesale market. This can be helpful if prices go up – because suppliers will only increase your bill if the wholesale rates have increased – but if prices fall, you’ll have no protection from paying less than you had been used to paying on a fixed deal.

Variable tariffs also give you less certainty about what your monthly payment will look like each month (we talk about how variable tariffs work in more detail here). If you’re happy with this level of risk and uncertainty, then it could make sense for you not to opt for a fixed tariff when paying bills. However, all is not lost as variable tariffs are typically cheaper than fixed ones. 

Conclusion

If you decide that a fixed energy tariff is right for you, there is one more thing to consider. As well as the type of tariff you choose, it’s important to shop around for the best deal. We recommend looking at comparisons on our website! Bright Utilities can offer you the best industry rates when you decide to switch suppliers.

Switching energy providers is the best way to make savings on your bills! Take a look and get a quote today!

Your comprehensive guide to energy tariffs

Why finding the right tariff is so important

Like anything else in life, everyone has their own way of doing things, it’s no different when you’re choosing how you use your energy and how you want to pay for it to your supplier. With wholesale gas prices on the rise, now is the time to choose the energy tariff that suits you, so you can stay on top of your bills. 

What tariffs are there?

Since energy companies strive to make billing for individuals and businesses easier, many different types of tariffs are available to customers. 

Here are the different types of energy tariffs and what they can do for you as a customer.

Standard Variable tariff

The standard tariff is known as the most expensive tariff out there. Prices can change at the will of the supplier, they typically match them to the price of wholesale gas units, these will continue to increase across the globe.

Standard energy tariffs are available for both gas and electricity bills, luckily, there is a price cap to prevent the tariff prices from becoming too expensive. This is because of the energy crisis and Ofgem has realised the threat of putting many in the UK into energy poverty is currently higher than it has been in recent history. 

If you switch energy supplier or into a new property, you will typically be placed on this tariff as it is the standard for all customers. Luckily, if you are on a standard tariff and want to switch providers, you will not be asked to pay exit fees since those on the tariff don’t have to.

Fixed energy tariff

These tariffs are great for consumers as they let you pay a fixed rate on your bills throughout your contract that you agree to. You will enter a contract agreement with the supplier and can usually get a good price on your tariff as they may offer the contract as a dual-fuel deal.

Despite the attractive tariff rate, if you decide to use more energy than agreed, your bill will go up in price as it will be matched to the standing charge and the rate of the energy being used. 

Some fixed rate tariffs will require you to pay an exit fee if you decide to leave it earlier than is agreed in your contract. However, Ofgem has allowed it that if you decide to switch contracts 42-49 days before your contract ends, you can’t be forced to pay an exit fee.

Dual fuel tariff

Dual energy tariffs are effective for most customers as they are a combined contract of both gas and electricity to a property. Some companies will even give you a nice deal by signing up to this tariff as it streamlines billing and energy into one place. 

You can get dual fuel tariff rates on a standard, fixed and online tariffs offer dual fuel and it is the most common energy combination in the UK.

Depending on your contract will determine whether you will have to pay an exit fee. It is important to note the conditions of your contract to see if you will have to if you decide to switch suppliers sooner than when your contract ends. 

Even though you will probably be entitled to many discounts by having a dual fuel tariff, there may also be discounts for keeping your supplies separate. It is always worth keeping an eye out for where you can make the most savings. 

Online energy tariff

Online energy tariffs are all managed by the customer online and are often the cheapest option available. You will be asked to manage everything regarding your bills online, such as sending meter readings and receiving billing statements via the internet. 

You may be asked to pay an exit fee if you want to switch supplier tariffs but this all depends on the conditions of your contract.

Like the system in place, if you need any help with your bills or energy supply, you will be able to get help via messaging services and online chats with energy suppliers. 

Prepayment tariff

Prepayment meter tariffs are also known as ‘top up’ meter tariffs and have limited options for customers. Those who use them top them up by using prepay tokens, cards or keys. These ways to pay can be purchased from shops and online as they are a common way for people to pay their energy bills. 

They’re a unique way to pay for your bills as you pay for your tariff before you actually use it.

Unfortunately, some suppliers won’t have any options for prepayment meter tariffs and so you will have to be very selective with who you decide to go with. And whether you can leave your contract early will depend not only on your conditions but also the debt you may be in.

‘Green’ energy tariff

Green energy tariffs either use a full renewable source for your power or a mix of renewable and non-renewable sources. Depending on what is used to power your building, the price will match the type of energy you are using. There are also options to use nuclear-free and carbon offsetting tariff deals when you sign up for them.

It’s always best to see what your supplier provides in terms of green energy. Lots of companies are aiming to increase their options for renewable energy tariffs for their customers to use. 

If you are concerned about the environment, then this contract is for you as you can rest assured that your energy is coming from a less wasteful place. If you want to leave your contract, you may have to pay an exit fee but you will need to know the terms of your contract to find this out. 

The bottom line:

Whatever tariff you want to switch to, make sure you do it with Bright Utilities. You will be met with experts in the field who will walk you through what’s available to get you the best prices to suit your energy needs. 

You can also see the competitive prices to help determine your decision to make sure you get the best deal.

There are many options out there so choosing the right one is important as you don’t want to be tied down to an energy tariff you end up unhappy with.

If you are unhappy with your energy tariff, look here for help with your exit fees: https://www.energyhelpline.com/help/how-do-i-avoid-exit-fees-when-switching-energy 

Four utilities industry predictions for 2022 to keep you up to date

Introduction to the current condition of the utilities industry:

The year has gotten off to an already intersting start with storms across the UK cutting off power to many homes, and tensions in Eastern Europe threatening our gas supplies. The utilities industry is at a pivotal moment in its recent history as we attempt to navigate a lot of uncertainty ahead of us. It’s hard to know for certain what the future looks like for businesses and homeowners alike but at Bright utilities, we have some knowledge about the future of the utility sector for the rest year. So we thought we’d package it into a handy guide so you can stay on top of what’s to come throughout the year.

This comes from our extensive utilities industry insider knowledge as experienced brokers in the sector, providing businesses with affordable and renewable energy. Below we will delve into four things you can expect from the utilities industry in 2022.

Energy prices squeezing the UK and growing energy poverty levels:

Because of the current imbalance in supply and demand on energy and gas for UK customers, there is still a growing concern for the direction the sector is going in. 2021 saw just under 4 million home energy customers displaced due to the number of companies going bust due to lack of regulation. 

In conjunction with the low sun levels seen during December, this has impacted the energy demand for outdated sources of energy. Ofgem has attempted to mitigate the effects of the crisis by taking control of customers’ supplies when their energy companies go bust so they are never without power to their properties.

Additionally, Ofgem has introduced a price cap rise on utility bills for customers. However, this has increased by around £700 per year, pushing more people into energy poverty due to rising costs of living not being matched by wage increases. 

Luckily, the government have recently introduced funding grants for new and upcoming renewable energy company projects to introduce more incentives to rely on green energy. With this help, the country may be able to move away from the current crisis, but for now the utilities industry is still at risk of putting many vulnerable customers into energy poverty.

An increased rollout of microgrids:

Microgrids are taking the utilities industry by storm as they cover many new ways of storing, producing and using energy. Storage technologies, generators, vehicle charging infrastructure, uninterruptible power supplies, multiple virtual power plants, and energy-efficient measures are some of the technologies involved.

Recent research indicates that 25.4% of UK and Ireland businesses have installed microgrids or renewable power sources (such as solar, wind) in an effort to reduce their environmental impact.

The global microgrid market is forecast to grow from just over £16.5bn in 2018 to over £29bn globally by 2023. This is great for the utilities industry as we have seen great growth in these systems that allow us to move a step closer to a greener future. Decarbonising is one of the government’s top priority to help the country meet targets to offset its carbon emissions in the fight against climate change. 

2022 will see no slowing down of the process to rollout more mircogrids to enterprises, especially since microgrids can be linked to smart meters. The utilities industry boomed with smart meters in recent years as they are a great way to cut down consumption and can help reduce your utility bill at the end of the month. As energy suppliers push for more smart meters to be used, we can anticipate to see more companies embracing microgrids into their business.

Sustainability will continue to dominate the utilities industry:

As we move closer to targets set out by the UK government to meet decarbonising targets, there are more plans in place to offer funding for more vital projects. These include funding grants for new renewable energy sourcing projects and new energy storaging projects that are hoping to make their way into the utility market. 

Moreover, more and more energy suppliers are now helping companies and everyday customers alike with installing electric vehicle fleets and EV chargers to help the growing demand to switch from combustion engines to electric vehicles. And, as electric vehicle prices are set to plummet, there will be an even bigger demand for the population to make the switch and we can see this prediction growing as 2022 progresses.

Due to the current state of the world, businesses need to invest in sustainable energy solutions to stay ahead of corporate social responsibility demands. Companies are some of the most vital groups that can help reduce the effects of the climate crisis, so we predict this prediction will help boost the utilities industry forward and in line with more sustainable goals.

Regulations will rule the roost:

Ofgem will conduct checks on companies to prevent more from going bankrupt as opposed to the ones that went bankrupt last year, displacing about 4 million home energy customers. In addition, they have a plan for energy supplier startups that prevents them from expanding until they can determine if their business model can sustain long-term growth. 

Because of the crisis and the events that took place in the UK utilities industry last year, Ofgem is committed to making sure customers’ energy bills are controlled by moving them to another supplier if their current supplier goes bust, so they will always have power. 

The utilities industry will continue to be governed by Ofgem and Citizens’ Advice. Citizens Advice will hold Ofgem accountable by ensuring that customers are protected and cared for properly. As the crisis is set to continue this year, the regualtion of the sector is predicted to stay so that it doesn’t get out of hand.

Conclusion

This year will continue to throw more curveballs that will disrupt the market as we navigate the tumutlutous times ahead. Luckily, Ofgem and Citzens Advice will do all they can to regulate the market, putting the country’s population at the forefront of their duties. You can find advice on their websites.

Visit the Ofgem website here: https://www.ofgem.gov.uk/information-consumers

Whatever the utilities industry faces this year, the current energy crisis and the move towards building a sustainable future will speed up the likelihood that these predictions will come true.

The Ofgem price cap explained

What’s currently happening?

The UK is currently gripped by rising prices across the board: in National Insurance payments, council tax rates, and in the energy market. The price of commercial energy is set to soar by 54% in April, equating to an additional £693, introduced through the new energy price cap by Ofgem, today. This is much more than analysts had predicted and many around the country are starting to worry. 

We’ve already seen rising energy costs as in October last year, it had risen by 12% to £1,277, it had been £1,042 during the same time in the previous year. This energy price cap is very generous, even though Ofgem is trying to alleviate the surmounting costs through bi-annual reviews. 

The energy price cap will come into effect on the 1st of April and will affect approximately 22 million customers on default tariffs who are paying by direct debit will see the largest increase. A worrying statistic as many use this way to pay for their gas. 

Since gas prices are still on the rise, the regulatory body Ofgem is doing all it can to help those who are being pushed into fuel poverty. They are here to set out ways to prevent us from paying even more for our gas and electricity supplies. However, with the additional £693 being added, it now will total the spending in a household to just under £2,000 a year. 

Why are gas prices rising?

It is worth noting that the energy price cap can only limit the amount you will have to pay for each unit of gas and electricity. There is no limit for how much you can be charged for home energy as the more you use, the more you will have to pay. 

Historically, fixed energy deals have been cheaper than variable alternatives. Although, the sudden spike in wholesale energy costs has forced suppliers to sell gas and electricity at a loss. But no one is willing to buy these deals. 

Part of the main reason that energy prices have been on the rise in the last 6 months is that it’s a global issue, and it has caused prices to quadruple in the last year. Because of the rising prices, it will mostly affect customers who are on the default tariff and haven’t switched to the fixed tariffs offered by most energy suppliers. 

Ofgem’s reasoning for this is that they track wholesale prices and review them bi-annually. Which gives them all of the resources they need to introduce energy price caps to the UK energy customers. Despite their efforts to try and help the customers affected by the many suppliers who went bust over the last year, those who have been moved to other providers will also be affected by this energy price cap if they have not moved to a fixed tariff. 

Why is there an energy price cap?

As previously mentioned, the government-run regulator Ofgem holds bi-annual reviews of current wholesale energy prices to see how they can help UK customers. They hold these reviews to ensure energy consumers pay a fair price for their energy while preventing energy companies from making excessive profits. 

By imposing an energy price cap, energy companies are allowed to pass on all reasonable costs to their customers, including gas price increases. Despite the unprecedented record rise in gas prices since August, the current cap does not reflect the current level.

Around 4.3 million domestic customers have been affected by 29 energy companies leaving the market or going into special administration during the last year. In order to prevent companies from going bankrupt and to cushion the blow to the energy prices of everyday people, Ofgem has issued a set of regulations.

Because of Ofgem’s position, they want to protect customers the most and make sure that their regulations seek out to protect many vulnerable people throughout the country. As millions are already in poverty in the UK, with many more to join them in the emerging fuel poverty situation, the energy price cap is needed to help many get through what could be a very difficult period to come.

Who will it affect?

Homeowners are set to see the biggest increase in their energy bills, although businesses won’t fully avoid the amounting situation and could see their bills go up as a result. The worst affected area in England is Bradford because many fall into the areas included in the top 5% highest energy bills whilst being in the lowest 5% for income. 

This is partly due to the way many of the houses were built before the 1950s. Because of the terrace-style that dominates the city, many houses don’t have a cavity wall, lacking the much-needed insulation that could help many homeowners save money on their energy bills, especially in the winter months when temperatures tend to plummet. 

However, the catastrophic effects of the introduced energy price cap will affect millions as it will put a quarter of the population into fuel poverty. Despite the government’s efforts to assist the most vulnerable, there will still be shortcomings for many, as they will have to decide between fueling their homes and other necessities. 

Other areas affected are Manchester and Birmingham, two major English cities that have helped power the country through the industrial revolution and remain powerhouses for the country. Although, both of these cities already have more than 20% of their residents in fuel poverty, discovered as of 2019. Almost three years later, we are still seeing more and more places where the number of people in fuel poverty will continue to increase.

Ways to try and tackle it

Despite the troubling times ahead for a lot of people, there are some ways people can alleviate their energy consumption. Firstly, there will be government discounts for those who are struggling. 

Take a look at the government site to see more information here: https://www.gov.uk/government/news/millions-to-receive-350-boost-to-help-with-rising-energy-costs

Luckily, due to the increased energy price cap, customers will be able to contact their energy suppliers to request discounts since many will be flexible for those on the lowest incomes. 

Although, the best two ways to help with your bills are by using a smart meter, as these can help you find out what is costing you the most in your monthly energy bills. And another way is to switch energy providers. Because the energy price cap will affect so many of us, it is important to note that you are always in charge of who you are with, especially since the hardest affected will be those out of fixed-rate tariffs.

Take a look at our competitive comparisons to see where you can make the most savings as the energy price cap comes into force. We want you to be safe during the energy crisis and hope some of these tips will assist you in keeping your energy consumption and spending low.

Get clever with smart meters

Smart meters are leading the future of technology designed to help manage energy usage and cut down on costs for many houses and businesses across the UK. Across the country, there were a recorded 24.2 million smart meters installed in homes and businesses as of 31st March 20221. 

You too can join in the green revolution by getting one installed at no extra cost. 

What are smart meters?

Smart meters are small electronic devices that track your energy and gas usage over time and accurately tell you how much money it’s costing you. Additionally, smart meters can immediately send these meter readings directly to your supplier so you won’t have to and can avoid paying fixed rates.

With smart meters, companies and properties don’t have to pay estimated bills anymore as smart meters are an accurate way to measure consumption. 

The device itself has a feature called an In Home Display (IHD) where all of this information is readily available. Because it uses wireless technology, some service providers allow you to view the information on an app on your smartphone when you are on the go. 

Importantly, the UK government wants all energy companies in Great Britain to have offered every customer a smart meter by 2025. Despite this target, even though your business (and home) will be offered smart meters, you don’t have to install them if you’re ued to your current way of handling your energy. However, they are a massive help to everyone since they have been quoted as one of the best ways to cut power consumption in the battle against climate change. 

They are great for seeing what you use, you pay for without any other additional, hidden costs that could catch out people who use estimated billing. By switching providers, you can choose your own tailored tariffs that are reduced because of the introduction of smart meters.

As part of our comparison tool, our experts suggest providers who use smart meters and are committed to the government’s net-zero energy plan. If you are unsure, look no further as the tariffs you can compare will do the talking. 

Ways they can benefit businesses

I’m sure many of us by now have had letters come through the post from our suppliers telling us about the benefits of smart meters in our houses, but have you considered the rewards that can be made by using them in businesses?

Whether you own a small to medium-sized enterprise (SMEs) or a larger company, smart meters can also cut down your consumption and therefore, your costs, so you don’t have to stress and can focus on the important stuff. 

The best feature that smart meters offer is their accuracy. By using them, you can carry out in-depth audits on your business to see where your biggest perpetrators of energy consumption come from if you are looking to upgrade your equipment. Meter readings can still be tracked on the go with handy mobile apps that allow you to continue working while saving time. 

Some energy suppliers such as SSE can also provide you with smart meters for up to 9 sites with Smart Meter Equipment Technical Specifications (SMETS2) meters. This can also allow large businesses to run multiple sites and track all of their energy usages precisely. Take a look at our other options for energy and gas suppliers today to see which other companies provide similar energy solutions.

One of the greatest benefits of having a smart meter fixed is that it is free to get one, highlighting that there are no hidden costs when you make the switch. Even though there is no need to switch to a smart meter, your business can benefit from the cheaper tariffs being offered to those who own smart meters. 

With the UK pledging itself to net-zero by 2050, by switching to a smart meter, you too can help reduce how much energy your company uses. You can carry on with what is most important to you whilst you save energy and gas by cutting down your consumption.  

As a business owner, you must consider the many ways your business could be wasting electricity and gas. As such, decreasing your costs will take time to come into effect. Take a look at our other blogs such as the New Year’s Resolutions you could make for 2022 or the blog outlining the ways you can reduce your energy use to see the many different steps you can take to offset your carbon footprint. 

Become a smart property today by getting a smart meter installed through one of the many energy and gas suppliers our comparison tool can suggest for you. There’s no reason to stop there, use smart meters to see where you can make changes to your equipment across your properties so you can cut your monthly bills, all while helping save the environment.

The decision is up to you…

Whether you decide to get smart meters installed or not, why not use our experts to see where you could be saving money by switching energy providers. We hope this provided some clarity on the benefits of smart meters and why they are being promoted by UK energy suppliers.

Ofgem’s new energy supplier regulations

After a total of 3.8 million homes have been impacted by the failure of energy companies, Ofgem has declared firms will undergo rigorous stress testing from January. There is no surprise that these steps have been implemented to protect the millions of people affected by rising energy prices.

One of the many new measures it will implement is preventing supplier startups from growing their customer base until Ofgem is satisfied knowing they are resilient enough to withstand financially troubling times. A supplier will be subject to checks before they reach 50,000 customers, then at 150,000 and 250,000. The next threshold will be between 500,000 and 800,000. This is to make sure that consumers are protected under such hardships as the world faces a gas crisis. 

In addition, Ofgem and energy suppliers will agree on a plan to ensure their businesses can grow and thrive in different circumstances. This comes from an article by Ofgem’s Executive Jonathon Bearley, released yesterday, as he states many companies “were not ready to weather a global shock on this scale”.

If the company is unable to survive on the market, the regulator may require the company to prepare a “living will,” which outlines how it will continue to offer customers a good service while making an “orderly exit.” As part of the plan, Ofgem will require providers to adhere to it once the new measures are in place.

Ofgem wants providers to drive innovation in a dynamic environment with the customer at the focus to make sure that bosses are being monitored to meet regulations. To keep these suppliers in check, accountability is the driving force for change. 

In response to the Climate Crisis, companies are being pushed to align with more durable practices, putting further pressure on business owners to become more sustainable. If not, prices will continue to rise as they already have by 500% in less than a year, since most of the world’s energy sources become more and more finite. 

In the Spring of next year, the government will start working on a consultation on new financial license requirements. Technical controls on “fit and proper” requirements will also be tightened. This comes in response to Ofgem being criticised for their handling of recent energy failings as these new regulations could have been implemented sooner.

The current crisis left almost 4 million customers without an energy supplier since 26 providers collapsed in the last four months, highlighting the much needed tougher regulations. Citizens Advice was one of the key critics of Ofgem during the energy crisis as they suggested a “catalog of errors” led to the rocketing prices of households’ energy bills. 

Citizen Advice has raised repeated concerns about the quality of service and financial viability of new suppliers spanning the period 2010-2019. In 2013, it called on the licensing regime that accredits new providers to be reviewed, a new practice planned to come into effect earlier next year.

If these new rules are not set in stone soon, many more households and businesses will see these patterns repeat themselves in the future. Jonathan Brearley also mentioned in his article “We need an urgent step change to bring in the rules and regulation needed to create a stronger, more innovative and resilient energy market.” to prevent such repeated weaknesses causing more catastrophic shortcomings. 

According to market analysts at ICIS, UK gas prices closed at an all-time high of 322.5 pence per therm on Tuesday, exceeding the previous peak of just over 298 pence per therm set in October. Many customers report that these are frightening times to live through, as rising prices contribute to a sense of financial insecurity. 

Ofgem’s plan to crack down is good news for consumers, according to Matt Vickers, chief executive of Ombudsman Services. He said there have been spikes in complaints about fast-growing energy firms that haven’t prepared for rapid growth. Despite reservations from consumers, a new price cap is scheduled to take effect in April, and Mr. Brearley warned customers to expect a further significant rise in gas prices. 

Ofgem has released a new plan for price caps, affecting those on default energy tariffs, where users would be subject to exit fees if they leave early and regulators would set the tariff in the month their contract begins. This practice has been condemned for adding pressure on suppliers leading to many of them collapsing, even though these caps are meant to give customers security in their energy plans.

The giant shakeup from Ofgem is set to come into force as early as January, but fear not as Ofgem and Citizens Advice have outlined on their websites ways you will be protected. When your provider collapses, you may be protected by automatic switchover through Ofgem or they might get the court involved in extreme cases, but you will be informed if this situation arises. Additionally, the introduced price cap is set so if you are automatically switched to a new supplier, your costs are unlikely to increase. 

These measures were put in place by Ofgem to protect buyers in turbulent times as our world moves toward a more sustainable and renewable future. As part of the government’s and energy suppliers’ efforts to protect the general public’s interest, new policies are finally being implemented. More information can be found on Ofgem’s official website and on the Citizen Advice website. 

Shell moves to the UK

The multinational oil giant Shell has sparked a political skirmish over the site of its headquarters after declaring it would shift to London abandoning “Royal Dutch” from its name in a corporate overhaul that has infuriated the Netherlands.

“Royal Dutch Shell” being a name the company had retained for 130 years.

Upon learning that Shell was relocating its headquarters from The Hague to the UK, Stef Blok, the Minister of Economic Affairs of the Netherlands, tweeted about the issue.”We are unpleasantly surprised by this. The cabinet deeply regrets this intention”. 

Shell will forage for shareholder’s approval for the reposition of its tax residence from the Netherlands to the UK, as well as cast aside its dual-class share structure for a single-class share structure, which will boost shareholder payouts not only in terms of speed but also flexibility. 

As a result of these changes, Shell is boosting its competitiveness while accelerating shareholder distributions and delivering its long-term strategy of becoming an emissions-free business. 

The goal being to slash its emissions by 2030. The instigation of this was due to a Dutch court ordering in April stating that the largest carbon emitter should reduce its emissions by 45% by 2030. This was hailed as a huge victory for climate activists. 

According to Shell, it will keep many of its divisions in The Hague, especially those dealing with technology and renewable energy.

In addition Shell has been in confrontation with Dutch authorities for quite some time over the country’s 15% dividend withholding tax on some of its shares. As a result, Shell’s shares are less attractive to international buyers. 

Furthermore, the country’s largest pension fund announced in October that it would cease investing in fossil fuel companies. However, the company will continue to list shares in Amsterdam along with London and New York.

Having cut its dividend, Shell has reduced its dividend payout for the first time since the Second World War. 

In July of last year, the company’s chief executive hinted that it might move its headquarters to the UK. At that time, two other large Dutch-English companies had already set an example. 

Unilever, a consumer goods giant, merged its Dutch and British subsidiaries in June last year to become a solely British corporation. 

This consists of UK-based Unilever plc and Netherlands-based Unilever NV – into a single company with British headquarters with the Dutch government having expressed dissatisfaction with the move. 

In Unilever’s case – and, it is presumed, in Shell’s case – the 15% withholding tax charged by the Dutch government on dividends paid by domiciled companies was one factor.

Although it may appear that this alteration may seem brash, it is the climax of a 10 year long undertaking (investors have been stipulating this for years). 

During his remarks, Sir Andrew Mackenzie, the chairman, noted: “At a time of unprecedented change for the industry, it’s even more imperative that we have an increased ability to accelerate the transition to a lower-carbon global energy system. 

 A simpler structure will enable Shell to speed up the delivery of its Powering Progress strategy, while creating value for our shareholders, customers and wider society.

Four more UK energy suppliers go bust

Four more energy suppliers are now bust in only a single day due to record high gas market prices tearing through the UK’s energy market.

Ofgem ,the UK’s energy regulator, has explained that 24,000 households are in need of a brand new energy provider due to the fall of 4 small energy companies on Tuesday. This means the whole number of energy companies that have gone bust since August is now 18. This crisis means that 2 million households will now be affected as a result. 

Supplying 14,800, Zebra Power is the energy provider with the largest customer base and has the foremost casualties overall.

Omni energy supplied around 6,000 domestic prepayment customers. 

Finally, there is AmpoerUk which consists of around 600 UK customers and provides for an additional 2,000 overseas households.

Firms are finding it difficult as they established their customers with cheap fixed deals meaning they were unable to stay afloat during climbing gas prices. 

Enstroga, Igloo Energy and Symbio Energy were the newest energy suppliers to cease trading.

It is predicted that even more energy companies are due to crumble within the following months. Thanks to the extremely high costs, suppliers are going to be unable to extend their tariff above the regulatory energy price cap. 

According to Ofgem, consumers switching to a replacement supplier would even be protected by the energy price cap. However the tariff of a new supplier agreed to by Ofgem could mean customers suffer a more dearer deal than their previous supplier that went bust. Perhaps larger companies taking on this surplus of households could mean they will suffer a similar fate to smaller suppliers. 

Consumer protection might result in a higher energy bill for some individuals. The government said it will be looking to lend money to larger energy firms to aid in the take-on of stranded customers.

By limiting consumers’ charges for default tariffs, the regulator’s price cap covers 15 million homes throughout England, Wales and Scotland. Still these household energy bills have risen by 12% since the beginning of the month.

Energy suppliers face financial pressure as a result of “an unprecedented rise” in global gas prices, according to Ofgem. Lower gas supplies and increased demand with a colder winter in Europe last winter also contributed to the recent surge in wholesale prices. 

There has also been an increased demand in Asia ,specifically China, for liquefied natural gas. These factors have helped raise wholesale gas prices throughout the world. Ever since January prices have risen by 250%.

Although gas prices are rising all over Europe it may appear that the UK is getting hit particularly hard. 

However there are reasons explaining this:

Firstly, the UK is amongst Europe’s biggest consumers of fossil fuels,85% of homes use gas central heating, and it is also liable for a third of the country’s electricity. 

Secondly, renewable energy supplies are down because it has been the least windy summer since 1961. Over the last week, wind provided just 9% of power for England, Wales and Scotland. 

Finally, there was recently a fire at the National Grid site in Kent which caused a power cable, supplying electricity from France, to shut down.

Energy prices are having an effect on UK businesses with many companies facing a considerable rise in their bills. This means businesses will need to lessen or halt production. They may even need to cease trading entirely which could result in employees losing their jobs.

Furthermore businesses could hand the pressure of the bills onto customers by demanding higher prices for their services.

In addition energy orientated industries are particularly vulnerable but any business that must pay for energy bills – to simply warm an office – is in danger.

Ofgem’s Retail Director Neil Lawrence said the agency’s top priority was to protect customers.

“I want to reassure affected customers that they do not need to worry: under our safety net we’ll make sure your energy supplies continue. If you have credit on your account the funds you have paid in are protected and you will not lose the money that is owed to you.”

“We will update you when we have chosen a new supplier, who will then get in touch about your tariff,” added Mr Lawrence.

Until a replacement supplier is appointed, affected customers should not switch providers.

Instead of looking for a less expensive deal, households should try to improve the energy efficiency of their homes. The Energy Saving Trust states that changes to our homes and habits could counteract the current price rises.

“We will update you when we have chosen a new supplier, who will then get in touch about your tariff,” added Mr Lawrence.

Despite the collapse of an energy company, consumers will still receive gas or electricity. It should take a few weeks for Ofgem to transfer your account to a brand new supplier. You will then hear from your new supplier regarding your new account.

In the meantime check your current balance, download any bills you may have and take a picture of the reading on your meter.

Citizens Advice says that it won’t be necessary to cancel your direct debit immediately. Rather cancel it only when your new account is set up.

Credit is protected and your money will be paid back. In the event that you owe money to your old supplier that money will be received by your new energy supplier instead.

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