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Why we are facing a crisis

We are currently facing a cost-of-living crisis. This is because the cost of everyday essentials like energy and food is rising much faster than average incomes.

Cost of Living

Inflation measures how fast costs have risen year on year, expressed as a percentage.  According to the ONS (Office for National Statistics) the most recent rate of inflation was recorded in September 2023 as 6.3 percent. This means that the cost of everyday essentials is around 6.3 percent higher than in September 2022. (And those costs were 10.1 percent higher than in September 2021). 

Why prices are rising

  • As countries recover from the pandemic, the demand for oil and gas is outstripping available supply. The Ukraine conflict has exacerbated this because a large amount of our supply usually comes from Russia.
  • Wholesale energy prices have reached an all-time high and energy providers are passing those costs on to consumers.
  • There have been disruptions to global supply chains, partly driven by Brexit and the pandemic.
  • There are reduced staffing levels across a range of businesses and public services for the same reasons.

These pressures meant that back in April 22:

  • OFGEM raised the energy price cap by 54 percent
  • National insurance increased by 10 percent
  • A freeze was placed on the income tax threshold
  • Benefits were increased by around 6 percent less than the rate of inflation

And this has meant that other prices have risen – rents, food and other household items. It’s likely that the full effect of price rises will only really be felt as the colder weather comes in and we all start to need more gas and electricity.

What's going on with energy?

Demand exceeding available supply has made energy more costly to purchase. As a result, energy companies have faced higher costs and have passed these on to customers in the form of higher energy bills. 

About the price cap

Prices increased dramatically in April 2022 after energy regulator Ofgem lifted the energy price cap. The energy price cap limits how much energy suppliers are allowed to charge their customers, and this rose by 54 percent in April 22. The price cap rose again on 1st October 22. The government has now committed to freezing the price at this level until 2024.

Our bills are NOT capped at £2,500

It’s common to read that the price of energy is capped at around £2,500. This might confuse some people into thinking that your bill cannot be higher than this when in fact it is a figure based on average use. An easier way to understand how much your costs will rise is to look at the cost per unit of energy along with your daily standing charge and compare what you paid before October with what you will pay going forward.

Unit rate prices have come down a little from where they were last year as the table shows. But daily standing charges are up - this is the figure that you must pay regardless of how much fuel you use.

See tables below for price caps in Southern Scotland:

Southern Scotland Gas prices
Form of payment Price cap FROM Oct 22 Price cap FROM Oct 23
Direct debit Unit rate: 11.06p per kWh Standing charge: 33.54p per day Unit rate: 6.85p per kWh Standing charge: 29.62p per day
Prepayment meter Unit rate: 10.59p per kWh Standing charge: 37.51p per day Unit rate: 6.63p per kWh Standing charge: 34.21p per day
Southern Scotland Electricity prices:
Form of payment Price cap FROM Oct 22 Price cap FROM Oct 23
Direct debit Unit rate: 36.51p per kWh Standing charge: 56.94p per day Unit rate: 26.88p per kWh Standing charge: 62.10p per day
Prepayment meter Unit rate: 32.80p per kWh Standing charge: 55.70p per day Unit rate 29.67 per kWh Standing charge 61.67p per day

Page last updated:
07 Nov 2023

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