Since we last changed our prices in May, the wholesale cost of energy has risen significantly. We wish we could avoid putting prices up again, but we’re not able to absorb these increased costs. Wholesale costs make up 40% of your bill – the biggest single cost.
At Bulb, we’re technology-led and are always aiming to be more efficient. Behind the scenes we’ll continue to work to try and bring our own costs down so we’re able to pass those savings on.
Wholesale gas costs are up 25% since May
Since our last update in May, wholesale costs are up a further 25%. This means that over the past year, wholesale costs have more than doubled. These increases are mainly driven by rising gas costs. The UK is still dependent on gas-fired power plants for a significant chunk of electricity generation. So, higher gas costs mean higher electricity costs too. A number of things are behind the increases. Global weather, including the cold winter we had in Europe and heatwaves in Asia, has contributed to low gas storage levels. On top of this, there have been issues with supplies of gas from Russia.
As Ofgem, the energy regulator, recently said: "Gas prices have risen to a record high in Europe due to a recovery in global demand and tighter supplies. This is increasing the cost of heating homes and pushing up electricity prices".
You might wonder why this impacts our energy prices when Bulb supplies renewable energy. At the moment, there is only one price for gas or electricity in the UK. There aren’t separate markets for green and non-green energy sources. The price is determined by what people will pay for energy at a particular time, regardless of the source. So, when the cost of electricity produced by burning gas goes up, so does the cost of electricity from wind, solar and all other green sources.
The energy price cap is going up
In response to the dramatic changes we’re seeing in the wholesale energy market, Ofgem has announced the energy price cap will go up on 1 October 2021. The cap limits the rates suppliers can charge for their standard tariffs (both standing charges and unit rates). For a typical Pay Monthly home (paying by direct debit), the cap is increasing by £139 a year (excl VAT). For a typical Pay As You Go home, the cap is increasing by £153 a year (excl VAT). Ofgem sets the cap based on historic energy market prices. At Bulb, we’re more reflective of the cost to supply energy as it is today. This means any change to the cap tends to lag behind a change at Bulb.
Our rates are going up on 1 October
Unfortunately, the increase in wholesale costs has been so significant that we've had to spread the increase across all elements of our pricing. We’re increasing our electricity and gas rates, along with our daily standing charge, for Pay Monthly and Pay As You Go members. A typical home (as set by Ofgem) using both electricity and gas will pay £2.90 more for their energy a week.
We'll be in contact with all our members individually between Wednesday 25 August and Tuesday 31 August to explain what the changes mean for you.
For current Bulb members, all rates will change on Friday 1 October. We don’t do exit fees, so any member who is unhappy with the new rates can leave at any time without penalty.
People who sign up to Bulb from Friday 10 September will be on the new rates once their switch completes. Anyone joining between now and then will be on current rates until 1 October. You can look up the new rates for your area by visiting the tariff page of the Bulb website.
We’re doing more for members who need extra help
There are a number of ways we can support members who are worried about being able to pay their energy bills. There are different kinds of support available and members can get in touch to ask about them. We’ve made it easy to join our Priority Services Register (PSR) and access extra support services. And if you're on a low income, or you get certain means tested benefits, you could be eligible for £140 towards your energy bills through the Warm Home Discount scheme. Applications are processed on a first come, first served basis. Members can register their interest now and we'll let everyone know when applications open.