Responding to the energy crisis

Here's our take on the energy crisis, written by our CEO, Jack Ray.

1st August 2022

Since I wrote my first article on the energy situation back in February, we’ve unfortunately seen the cost of gas and electricity continue to rise as a result of wholesale prices increasing. Some reports are now indicating that the next energy price cap in October 2022 could be?as high as ￡3,500 per year?for the average home and close to ￡4,000 for the January 2023 cap.

With a political leadership contest and continued volatility within gas prices, we’re all hoping for some additional government support to add to the ￡400 per household committed later this year and the ￡150 council tax rebate. Rishi Sunak has committed to cutting VAT on energy bills, which stands at 5% of consumers representing a further ￡175 saving per year, based on a ￡3,500 standard variable tariff.

So, what does this mean for our partners, #lettingagent clients and home mover customers?

What is the price cap and who are Ofgem?

Ofgem is the industry regulator and is able to set a price cap to ensure customers are protected from high energy prices.?

The price cap aims to provide a base-level tariff that any home mover would land on when they move into a new home. Suppliers will likely want you to lock into a contracted tariff for a longer length of time e.g. 12 or 24 months, but it’s super important that you’re aware of the difference in price between a contracted tariff and the price cap (standard variable tariff or SVT), as the SVT will most likely be cheaper than a contracted tariff.

This is particularly relevant if you are moving into a new home and are being presented options for a standard variable tariff vs a fixed tariff by the supplier of your new home. It’s important that you check the unit rates & standing charges and are aware that just because a tariff is fixed, it doesn’t mean that your payments will remain the same all year, your payments will be based on your usage.

What does the increased price cap mean for Homebox customers?

Unlike all other bill package providers, we made a decision to offer our customers the option to either remain on the standard variable tariff (the cheapest available tariff) or to choose a fixed 12-month tariff with our customers.

Our ambition here was to give our customers the choice between paying less now and more later or having a fixed monthly payment (subject to usage) from the outset. As we move closer to the standard variable tariff increasing in October, we have secured a tariff with British Gas for our existing customers who had originally chosen to remain on the standard variable tariff. we believe this tariff with British Gas will sit in line with the next price cap.

By securing this tariff, we’re not only giving our customers the best deal we can get with the largest and most secure provider in the UK, but we’re also able to provide our customers with the peace of mind that their unit prices and therefore monthly payments will not increase again in January and April 2023.

What does this mean for new customers?

We’re helping new customers to sign up for the tariff we have secured with British Gas which we believe will sit alongside the next SVT cap. New customers can still choose to remain with their existing supplier until September if they wish to, but by signing up now their property will move over to British Gas in September on the new tariff.

How does this impact #students looking to get their bills set up for the summer?

We’ve received a large number of enquiries from well-organised students looking to get their bills sorted as they take over their new student homes. As mentioned above, we have chosen to provide new customers with options for how they’d like to pay for their energy to be as flexible and transparent as we can be.

Our plan and aim is always to ensure that our customers are on the best possible rates for their bills. With this in mind, we have secured a tariff via British Gas who are able to keep the unit prices in line with where we believe the standard variable tariff will increase to.

The only way in which the price for your energy bill would increase from our quote is if your usage exceeds the amount you are paying each month for your bills.

How does this impact #lettingagents and #landlords ?

For our letting agent and landlord clients, the impact can be split into two categories:

1 - Letting Agents using Billing Better to manage changes in tenancy and voids.

Our platform will continue to notify suppliers of changes in occupancy. Unfortunately, there are currently no energy suppliers supporting void switching, meaning we are simply notifying suppliers of a change in occupancy rather than completing a switch of energy.

2 - Landlords and letting agents offering your properties with bills included

Landlords and letting agents pay Billing Better for the bills within their property will have the same impact as our customers as listed above within the sections titled “What does this mean for our existing customers?” and “What does this mean for new customers?” Please don’t hesitate to contact us regarding our tariffs and pricing for your bills included properties.

What options do I have as a home mover?

Unfortunately, because the wholesale prices of energy have increased to higher than the price cap set by Ofgem, it has meant that suppliers are not allowing anyone to switch to them unless they are offering a high fixed tariff. Until the price cap increases in September / October, your best option (from a price perspective) is to remain on the standard variable tariff.

What is Billing Better doing to help customers whose bills are increasing?

Unfortunately, the increase cost to energy and to the general cost of living is out of our control, however we are doing as much as we can to help our customers including the following:

Making sure you’re on the best deal?- Rather than recommending an expensive, in-contract tariff that earns Billing Better commission, we’re enabling our customers to remain on the standard variable tariffs with suppliers until September 2022.

Negotiating the best tariffs?- We're committed to helping our customers, and we're confident the deal we've negotiated with the country's biggest energy supplier will benefit many households during this unstable period.

New perks and rewards platform?- Our new perks and benefits platform will be launched in the coming weeks. We're excited to launch the platform, as the average savings per household will be in the region of ￡600.00 per year, and we know our customers will really appreciate and value this help and support, through discounts at supermarkets, restaurants, and family days out and everyday purchases.

Is there a light at the end of the tunnel?

Yes! Kind of… Some data is suggesting that the price cap review in April 2023 will see prices drop for the first time in a long while. With this, we’re hoping to see wholesale prices drop, giving suppliers the ability to offer more competitive prices.

With the government leadership race well underway, we’re also hoping to see more commitments of help for households to manage their energy bills.

If you have any questions as a partner or customer, please don't hesitate to reach out to me direct using the below details:

All the best,

Jack

Email: [email protected]

*Note that this article is based on Jack's opinions based on his industry knowledge and is not intended to act as official advice.