Energy costs are set to increase in the coming months, after the energy regulator Ofgem announced a 54 per cent increase in the price cap to start from 1 April 2022. The price cap limits the per kWh rate you pay rather than your overall bill. The price cap is linked to wholesale energy costs so when the wholesale costs go up or down the price cap will follow. The aim of the price cap is to pass on savings to customers on variable energy tariffs when wholesale prices reduce.
What does this mean for you?
A 54 per cent increase means most households will pay on average £700 per year more for gas and electricity. The price cap doesn’t impact other fuels such as oil and LPG.
If you’re on an existing fixed price contract with your energy supplier, you will remain on that until the contract ends and you roll over onto a variable rate. That The price cap for the variable rate tariff increased from 1 April taking the average dual fuel tariff to around £1,900 per year.
Those on pre-payment meters will also be impacted with that price cap increasing by an average £708 from £1,309 to £2,017 on 1 April 2022.
Making sure your home and appliances are as energy efficient as possible can help reduce the amount of energy you use.
What support is available?
The Government announced some measures to partly help with the steep rise:
- A one-off £200 credit on electricity bills in October 2022. Customers will pay this back through an annual £40 instalment each year for five years, so it is not a rebate. This will apply to all electricity bills.
- A £150 council tax rebate paid from April 2022 for those in council tax bands A to D. This does not need to be paid back. If you pay your council tax bill by direct debt you will receive the payment automatically. Support may be available for households outside of this eligibility for vulnerable households subject to Local Authority funding.
Existing support that will continue;
- The Warm Homes Discount is a one off £140 payment per year between October and March for eligible households. The core group eligibility is a resident receiving Pension Credit Guarantee. Participating energy companies will have their own eligibility for a wider eligible group.
- Cold Weather Payment is £25 for each 7 consecutive day period where temperatures in your area are at or below zero degrees centigrade
- Winter Fuel Payments are a one off payment each winter paid to residents who were born on or before 26 September 1955. The payment is automatic for eligible households.
What can I do?
There are actions we can all take to help with rising energy costs:
1. Access free advice
Local energy charity Act on Energy offer free advice on heating your home, energy saving tips and fuel debt.
Act on Energy can provide advice and access to funding to support energy efficiency improvements to your home to help reduce your energy usage.
Act on energy can be contacted Monday to Friday 9am to 5pm via 0800 988 2881
2. Speak to your supplier
If you’re worried about your energy bill, suppliers can work with you on a payment plan.
3. Look at where you could save energy
The Energy Saving Trust have tips to help keep your household energy usage down without compromising your comfort. Examples include switching appliances off when not in use and when buying more efficient appliances when they need to be updated.