Like over a million other people in the UK, I’ve just been informed that my gas/electricity provider has gone out of business! Prices on new tariffs have gone through the roof! What should I do?
A bit if background, I was with a colourful power company for just about a month and now they’ve gone bust. Our big old house is a massive heat sink – so getting cheap heat/power is important. Provider going bust? Not ideal, I know. So what should I do now?
There are three answers to this one – and you’ll not like either.
Answer 1: Do nothing
So what if you provider has gone bust. You’ll still get gas and electricity supplied to your house and it’ll all get sorted out. You might be pushed onto a new supplier at some point but you’ll not do too badly out of it – there is some consumer protection. Also, if you are a sensible person, you run a personal finance surplus meaning that you have the savings on hand and income exceeds your outgoings to not worry about this type of thing. And worry is bad for you, stress is a killer!
Answer 2: Reduce your consumption
If you are really worried about the cost of all of the energy that you use, try using less of it. This is a rather obvious option that people overlook. Why not look at how and where you use energy and where it’s lost and work to reduce it. Worrying does nothing – but thinking helps you take action. In just a few minutes you could find where you’ve drafts in your house and plug them – that’s saving you money right there. Other things like changing lightbulbs, improving insulation, getting a fancy thermostat (like I have) or installing more efficient heating (think heat pump which benefits from the RHI), solar panels etc. are on the cards – but perhaps coming up with a list of options and working out the cost/effort/benefit/return on investment and then using that to target your efforts is the way to do it.
Answer 3: Own the Means of Production
Being a consumer sucks – it costs you money and only gives you the illusion of choice. Of all the energy suppliers that there were in the UK, the actual gas and electricity supplied to you house doesn’t actually change. Prices may vary – that’s true but it’s the same stuff that you are using and the prices all go up/down depending on the wholesale markets. To insulate yourself against the cost of power – why not invest your money into power producers? I’ve written before about some of our investments in renewable energy – which may not have performed like super-hot US tech stocks – have given us a good return over the last few years (in a world where power prices were lower btw.)
Greencoat Wind (ticker LON:UKW) invests in windfarms in the UK and has a dividend yield of 5.15%. If your energy bills are £1,000 a year, then a £20,000 investment means that their dividend will cover your cost and if costs go up, then Greencoat’s revenues go up and you aren’t hurt by it. Ideal for those who can’t build their own windmill. Other funds are available.
You Smug Git
I know that this might come across as being a bit smug – but who cares. Yes there are millions struggling in the UK with the cost of living and bills going up hurts them. But I took steps years ago to mitigate and even profit from it. I also don’t have to really worry about money (and who wants to worry?) and if anything I should rejoice at higher prices because all of our windmills, anaerobic digesters, solar farms and hydro plants make us more money. How come “Joy for homeowners are house prices soar!” is a legitimate newspaper heading, but “Joy for homeowners as cost of living soars!” isn’t? Checking recent house prices, ours is up 14% in a year or around £35,000 – yet people are worrying about a few hundred quid extra on their heating bills – a bit of perspective please!
There seems to be a train wreck of Black Swan events recently – maybe interconnected, maybe not. This current energy crunch was perhaps a logical outcome or came out of the blue. In any case, we all need to take responsibility for our own situation and not rely on/complain about the government doing or not doing something. Financial Independence gives you the strength in a monetary and psychological sense to withstand these challenges. Worrying about things without doing anything differently, making any changes or even trying is just a total waste of time. So with my energy provider and the current panic – I’m just to calmly wait it out.