Why have Electricity Prices gone up?

UK Query: Can anyone help me understand why my electricity price has gone up by so much? Both my suppliers went bust, and so Gas went up from 3.1p KWh to 4.1 (before VAT). Which under the circumstances I thought was OK.

However what I can’t understand is why my Electricity cost went up from 13p per KWh to 20p (I.e. the capped rate), which is a much higher increase. Now I realise that some electricity is generated from gas, but presumably for companies that use 100% renewable, the price should not have gone up.

I’m clearly missing something - any ideas? Or is it just a way for the companies to claw back money for their loss in Gas prices, in which case presumably the Electricity only suppliers would be able to easily undercut them.

Your high price is due mainly to the spot price for both electricity and gas, High gas prices lead to high electricity prices. It also involves a lot of geopolitical factors as well though we are not allowed to discuss politics here. That said current gas prices in Europe up largely due to Russian cut backs in how much they pump into the European market, ( they can send it to China and Turkey etc) and many take the view it’s a deliberate cut back to help force through approval for the Nord Stream 2 pipeline from Russia to Germany bypassing Ukraine. You can easily research current political events/thinking on this as to why. A high spot price in Europe for Electricity will mean companies like France will also stop exporting renewable energy such as nuclear, leading to more electricity say in the UK having to be generated from gas… This is a much simplified description as the subject is huge.

Any company using so called 100% renewables usually pays the spot rate for electricity as the producers are generally not the company selling the electricity to residential customers. Those companies that do both, generally have a set up whereby the generation from say windfarms is under one company listing and separate from another company listing selling to you. they will sell the electricity from one company to the other again using the spot market price I suspect.

Anyone who believes that the electricity coming into their house is solely from renewables just because they are with a company claiming they only sell renewable energy is somewhat naive as to how the system works and how electricity is distributed.

Just glad I’m still in my 2 yr electricity fixed price tariff which lasts until July 22 (no gas).


Presumably you were on a low fixed price deal with your previous supplier, and you’ve been put on the standard tariff with the new supplier, which I understand is how it works when suppliers go bust.

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If a company is a genuinely green supplier, they only buy green energy from the generators. So while what you use is obviously a mix, you are only paying for green energy production.

Any decent supplier will buy months ahead, precisely to shield themselves from variations in the spot price. The failure to do this properly is why many companies have failed.

Yes that right

Many thanks for the explanation. That certainly makes sense. It might be because we were on such a good fixed deal beforehand, that’s its more noticeable now. We only had that fix deal for 4 months before they went bust - but I guess its all swings and roundabouts

Yes that’s precisely why a lot have failed, pretty poor way of running a company (IMHO) by not having agreed future contract pricing. This is the main reason why many of these (generally smaller) companies went bust, to get a share of the market they took a risk in not paying more for a fixed price and got burnt when the price went above what they had agreed to sell it for to their fixed price customers. Customers saved a little only to be left high and dry and paying much more than those fortunate enough to be with a company that did buy in advance.

Agreed but there are many days when say low wind means more “green energy” has been sold than is produced, its certainly a bit of a minefield and no company can absolutely guarantee a green supply. In 2019 for instance Green Star Energy, Ovo Energy, Pure Planet, Robin Hood Energy, So Energy, Tonik Energy and Yorkshire Energy were all suppliers selling ‘100 per cent renewable’ electricity tariffs. These deals were backed up by Renewable Energy Guarantees of Origin certificates as opposed to generating renewable energy themselves or having contracts to buy it directly from generators.

There was a lot of concern that the system allows suppliers who rely solely on REGOs to ‘greenwash’ their tariffs whilst seemingly doing little to support new renewable electricity generation. If, for example, a big corporation with a clean energy target strikes a deal directly with a solar farm to buy its electricity, the company will receive certificates for every megawatt hour generated. Later, it could choose to sell these certificates – separate from the electricity they represent – to other companies while using the contract with the solar farm as proof that it has reached its clean energy target.

Not sure if they have changed the rules yet to avoid misleading consumers in this way………

I agree. We were with Bulb, which made a big thing about being green, which I fell for, only to discover later that they were buying REGOs. We switched to Octopus in June, on a two year fix, which turned out to be a good decision. There are lots of areas where things need to improve, not just renewable transparency but also Ofgem checking companies’ viability much, much more rigorously. These companies may make a fast buck but it’s Joe Public that suffers.


So, just to be a trifle mischievous …… people who buy Green Electricity exclusively, and I understand their eco-friendly intentions, have their electricity supply interrupted when there isn’t enough Green Electricity being generated to meet their requirement ?

Or are they entitled to use Dirty Electricity when it suits them ie when Green Electricity is in short supply ?


Are you just trying to stir up a silly argument on a thread that has been both factual and helpful? What’s the point?

He’s just being a trifle mischievous….


We all like a bit of trifle at Christmas


That’s precisely why I wrote … “just to be a trifle mischievous”


Typically electricity prices are driven by oil and gas prices. Especially in winter.
Electricity production in the UK has changed massively from when the industry was privatised in 1991. Those early 10 to 15 years saw artificially low electricity prices. Industry saw the biggest benefits, but so did the public.
Then the generators, infrastructure and local distributors woke up. Lower investments in plant and people right upto 2005ish.
By 2026, the only UK nuclear station still running will be in Suffolk. Somerset’s new offering will see first unit to grid somewhere inside of 2029.
Yes, PV and wind are now major contributors. Coal and oil long gone.
Gas ( ccgt) has its place, but guess what? Its expensive right now.
Traditionally there was good money to be made in generation, but the rules changed 15? Years ago, and now place significant financial risk when you don’t pipe into grid what you said you would. Essentially the generator has to buy the generation at the spot price from another generator who has not forward sold.

The cost of eco-friendly life is expensive. This applies to eco-electricity just like anything else.

But it’s a bit like safety. Safety is expensive (according to the bean-counters). But just try having an accident !!

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I also currently have a long term fixed deal with Octopus, and my Feed in tariff for my solar panels with Good Energy.

I would like to move back to Ecotricity next time I switch as Dale Vince has a ‘bills into Mills’ approach, I.e they use profits to build renewable energy generation systems.

I have a client who has been in oil/gas exploration his entire career going back about 40 years. Every time I meet him these days he is ever more incredulous as to why everyone’s so keen to pay huge amounts for gas from that there nice Mr Putin, rather than suck it up from the rather substantial amounts laying just off the Dorset coast.


Hmm, what can possibly go wrong :woozy_face:

Yeah, get used to high energy prices. And they will get higher.

It’s all very noble pontificating on a greener and cleaner future, however that’s a reality that’s way off yet. In the meantime we will be relying on fossil fuels for years and years to come. However if no-one is investing anew in getting the stuff out the ground anymore, then with demand remaining at least static, yet supply dwindling, then prices are going only one way. You think energy prices are high now? Well, I suspect you ain’t seen nothing yet.


I sympathise, and am in the same position as you.

My supplier went bust shortly after I had signed up for a second year’s contract with them. Both gas and electricity tariffs immediately went up dramatically. I had considered switching to a 2 year Octopus deal, but chose to stick with my existing supplier. A big mistake in retrospect, but who could have anticipated the extent of the impending energy problems?

My new supplier has warned me that there is likely to be a further 50% rise in energy prices once the Government restrictions on tariff are removed or reduced in the coming year!

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