Energy price hikes for next five years

Mr Buchanan told the BBC that the closing of older UK-based power stations could mean a 10% fall in capacity by April alone.

15:04 28 February 2013

 

After the latest round of price hikes from the Big Six energy suppliers, consumers can brace themselves for another three to five years of rising prices as the UK becomes more reliant on energy imports, according to Alistair Buchanan, the chief executive of energy regulator, Ofgem.

 

Mr Buchanan told the BBC that the closing of older UK-based power stations could mean a 10% fall in capacity by April alone.

This, coupled with the fact that renewable energy sources such as wind, wave and biofuels are still in their infancy, means that supply will be low but demand still high and, as Mr Buchanan puts it, "everyone knows what this means for prices."

 

He added that the UK needs more gas supplies to meet this shortfall. But while the process to decommission and dismantle ageing and polluting power stations is underway, no new ones are currently being built to replace them, despite having planning permission granted.

 

In its response to Ofgem, the government said that, while it plans to close around one-fifth of the UK's power stations over the next 10 years, it is hoped that these reforms will generate £110billion of private sector investment which will lead to clean power generation.

 

 

Insulate yourself against rising energy prices

 

The immediate solution to this problem is to import gas supplies to meet the shortfall, but this comes at a price, and one that will be pushed up even further by the fact that the UK will be bidding to secure imports at a time when supply is tight across the globe.

 

And the extra costs incurred by the energy companies will be passed onto consumers who will be hit with even higher energy bills.

 

So what can you do to keep costs down? 

 

Mr Buchanan suggested that the UK needs to resolve the problem of 'leaky homes', which means that more UK households need to become energy efficient and insulate lofts, wall cavities and boilers to stop heat escaping.

 

Recent figures from the Energy Saving Trust indicated that houses without cavity wall insulation cost an extra £135 per year to heat, while proper loft insulation can cut energy bills by around £175 per year.

 

And although it can cost up to £700 to get both your wall cavities and loft insulated, the savings made mean that the cost would be recouped within a couple of years - and it would also help to reduce the strain being placed on resources.

 

The government has introduced the Green Deal to help people fund the cost of energy-efficient home improvements. You can read more about it here.

 

A spokesperson for the Department of Energy and Climate Change has also outlined the schemes place to help those most at risk, such as the Warm Home Discount Scheme which will see around two million households receiving support in 2012/13.

 

The spokesperson added: "This includes over one million of the poorest pensioners who will have received an automatic discount of £130 off their electricity bill."

Make the switch to save even more

 

In addition to properly insulating your home, you need to make sure that you're on the right tariff, which could mean switching provider.

 

You can use MoneySupermarket to instantly compare the latest tariffs and use our switching service to change to a better deal.

 

Once you have agreed to switch supplier, you should be on your new tariff within about eight weeks, and there will be no new pipes or supply lines installed nor will there be any disruption to your service - you'll get the same fuel in the same way you always have, it'll just cost you less.

 

For more information on the switching process, click here and for more ways to cut your bills down to size read @MoneySuperMarkH's article here.