Money blog: Welcome to our Q&A on energy bills as the price cap falls – Sky News

Welcome to the Money blog, your place for personal finance and consumer news and tips. Leave a comment on any of the stories we’re covering below.
Monday 1 July 2024 19:00, UK
Olive oil has become the latest staple to undergo “bleak” anti-theft measures.
The cooking product was spotted encased in netting and tagged with an alarm in an unspecified Tesco store, leading one customer to ask: “What has the world come to?”
It is just the latest product to be subject to supermarket security measures that have surprised customers, after an out-of-hours smoke machine was introduced in another Tesco store last month.
Neither security features are part of a universal policy and have been implemented only in individual stores, Sky News understands.
“All ‘anti-shoplifting’ measures are theatre,” said one shopper on X, beneath a photo of the olive oil.
“This is so bleak,” said another, while a third joked the oil “has to wear fishnets now”.
We revealed earlier this year that there had been a 110.5% increase in the price of olive oil since January 2021.
High temperatures and droughts in Spain, the world’s leading producer and exporter, have dented the harvest – a problem only worsened by global inflationary pressures.
Separately, a bacterial disease called Xylella Fastidiosa has attacked and killed century-old olive trees, severely diminishing yields in southern Europe.
And heightened prices have led organised criminal gangs to steal the “liquid gold”.
Read more on what’s behind exploding olive oil prices here…
We feature a lot of data on the changing prices of houses in the UK, but how do they compare to the rest of the world?
New data shows the UK ranked 37th for house price growth out of 56 countries analysed by Knight Frank for the Global House Price Index.
At 1.6% up over the year to the end of March, the UK underperformed (with the global average at 3.6%) but outstripped its European neighbours.
Only 11 countries saw prices fall, eight of which were European, with France (-5.2%) and Germany (-3.9%) feeling the effects of slower economic growth and high recent inflation.
Across all 56 markets, 82% saw annual price growth in the first quarter of the year – the strongest showing since the last quarter of 2022.
“Many markets are suffering from a lack of properties to sell as well as slow new-build delivery, leading to relatively healthy demand pushing prices to new highs,” said Liam Bailey, Knight Frank’s global head of research.
“In the longer term, however, only lower debt costs will sustain price growth.”
With a 52% price increase, Turkey was at the top of the table by a huge margin – 36 percentage points – but there’s more to this figure than meets the eye.
Consumer Price Index inflation in Turkey has risen 50% in the year to March, meaning in real terms house prices have actually fallen by 9.9%.
Recently we reported on how Barcelona had cracked down on tourism by planning to abolish short-term holiday lets
The Spanish city has now gone further in its war on overtourism by banning the display and sale of “offensive” souvenirs. 
It says sexist and homophobic messages on some souvenirs are tarnishing Barcelona’s image. 
The ERC’s deputy spokesperson Jordi Coronas said the ban included products such as “penises with the Barcelona brand, T-shirts with sexist or homophobic comments, or simply comments that, when displayed on these products, devalue Barcelona”. 
Ahead of our Q&A, switching service Uswitch provided us with a list of what it considers the cheapest energy tariffs on the market right now.
It’s worth reading the advice from Which? in our Q&A below (see 15.02 post) before deciding to switch from a standard variable tariff (that’s what most households are on) – but if you’re aware of the risks, then cheaper energy is available…
A big thanks to all those who submitted a question for our Q&A on the day the energy price cap fell – and sorry if we didn’t get to yours.
A big thanks also to Emily Seymour, Which? energy editor, and Kate Mulvany, a principal consultant at Cornwall Insight, for tackling 10 of your questions so thoroughly.
Scroll down to read through their answers.
Kate Mulvany, a principal consultant at Cornwall Insight, says..
The outlook for the upcoming winter appears promising, with strong gas reserves across Europe providing a healthy buffer to seasonal demand. 
While a very cold winter would increase the need for gas for heating across Europe, the UK’s ability to secure gas and electricity from multiple sources keeps the risk of disruption to the flow of energy relatively low. 
Quite a few things would need to go wrong at the same time for there to be an increased risk of a widespread blackout. 
However, short-term blackouts would still be possible – as indeed at any time of year – due to storms or other weather incidents, as well as through localised network issues. 
It’s worth mentioning that ministers have claimed the UK faces blackouts without new gas-fired power stations…
The bigger risk for homes in the UK is the pressure on energy bills. Although electricity and gas supplies appear healthy, affordability remains a concern, as seen in recent winters – particularly 2022-23.
Emily Seymour, Which? energy editor, says…
As we said in one of our previous answers, there isn’t a “one size fits all” for the best deals out there as it will all depend on individual circumstances. 
However, there are some tariffs available that are cheaper than the current price cap and might be worth considering. 
When Which? last checked, Ecotricity and Ovo both had fixed deals available for cheaper than the July price cap. 
However, Ecotricity’s deal requires a smart meter – or you to agree to have one fitted – and Ovo’s is only available if you also buy annual boiler cover, so you’ll need to weigh up if this is right for you. Both also come with exit fees if you want to leave early. 
Tracker tariffs change in price relative to the price cap every three months when the price cap is reset to offer slightly cheaper rates than you’d be paying otherwise, and could be worth considering. They’re currently available from E.ON Next, Scottish Power and Fuse Energy.
Consumers can use switching services – like Which? Switch Energy – to keep an eye on the best fixed deals available and compare deals to see what’s cheapest for them. 
We’d always recommend checking the exit fees on fixed deals so you’re not tied into a tariff if something better becomes available.
Kate Mulvany, a principal consultant at Cornwall Insight, says..
The current government has explored various methods to decouple wholesale gas and electricity prices through a programme called the Review of Electricity Market Arrangements (REMA). 
However, each option identified presented potential drawbacks for customers, as well as benefits. 
For example, one proposed solution was to set different prices for electricity generated by renewable sources compared to that generated by more carbon-intensive methods, such as burning gas. 
A significant challenge is that the country cannot yet generate all its electricity from renewable sources 24/7. 
During shortfalls, such as on a winter evening with low wind, non-variable renewable generation methods would still need to be used, meaning customers would still see the impacts of gas prices in those of electricity.
Emily Seymour, Which? energy editor, says…
For the Warm Home Discount, Cold Weather Payment and Winter Heating payment, you should receive any discounts automatically if you’re eligible. 
For the Warm Home Discount, each energy supplier also has its own eligibility criteria, which are approved by the energy regulator Ofgem, so you should check with your provider to see whether you meet its requirements.
If you were born before 25 September 1957, it’s also likely you’ll be able to get Winter Fuel Payments of between £100 and £300 for winter 2023-24. 
The payments are to help pay for your gas or electric heating in winter. You should get this automatically and should contact the Winter Fuel Payment Centre if you think you’re eligible but haven’t received anything. 
Energy companies are obliged to help you if you tell them you are struggling to pay and will not disconnect you if you miss a bill payment. 
If you are struggling with your bills, let your provider know and explain that you want to establish a payment plan that you can afford. 
Discuss your options with them, as they may include a review of your payments, a reduction in your payments or a payment break, more time to pay, and access to hardship funds.
Kate Mulvany, a principal consultant at Cornwall Insight, says…

At this point in time, we are not expecting a return to pre-COVID prices.
This is primarily due to the significant rise in the wholesale prices of electricity and gas following the Russian invasion of Ukraine. 
The cost of the fuel – the wholesale cost or the commodity cost – is the largest part of the energy bill. 
Although some non-wholesale components of energy bills may decrease, the main factor driving prices is the cost of commodities. 
The UK’s heavy reliance on imported electricity and natural gas exacerbates this issue. 
Therefore, increasing investment in domestic renewable and low-carbon energy sources is crucial to reduce this dependency.
Additionally, implementing measures to decouple electricity and gas prices in the wholesale market could help lower bills.
Kate Mulvany, a principal consultant at Cornwall Insight, says…
The price cap limits the unit rates and standing charge levels that suppliers can charge domestic customers across many circumstances. 
Some parts of the energy price cap are directly regulated by Ofgem, while others, such as wholesale energy costs, reflect market conditions. 
The price cap includes various elements such as wholesale energy costs, network costs (the cost of moving gas and electricity around the country), operating costs, environmental and social policy costs, and the allowable profit for suppliers.
The role of energy suppliers is to purchase electricity from generators and sell it to customers, managing customer service, billing and other retail functions. 
Ofgem’s formula for the price cap includes an allowance for suppliers to make a profit, which is overall a relatively small percentage of the total price cap amount. 
Headlines about energy companies’ profits can refer to companies involved throughout the energy industry, not just suppliers. 
For example, companies that extract and transport gas or which generate electricity might not have prices directly regulated by Ofgem. 
There is global competition for energy, and so attempts for the UK to control wholesale costs might have an impact on security of supply. 
Since the cap limits unit rates and standing charge levels, but not the total bill, there has been increasing support for a social tariff, which would offer discounted deals to vulnerable households. 
Social tariffs for energy are not a new policy; they have been implemented before and are currently used in other sectors, such as telecommunications and broadband.

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