Rising energy prices
The 80% energy price cap rise for this October has been cancelled.
Energy prices will rise this October, although far less with the replacement of the energy price guarantee.
Energy Price Guarantee
The energy price guarantee will ensure that the typical household pays on average £2,500 a year on their energy bill until the end of March 2023. The Chancellor announced that there will be a Treasury-led review to consider how to support households with energy bills from April 2023.
The consumer saving will be based on usage, but a typical household will save at least £1,000 a year (based on current prices from October).
You do not need to apply, and there is no need to contact your energy supplier. For consumers in England, Scotland & Wales who pay for their energy through monthly, quarterly, or other regular bills, the energy price guarantee will be applied when your bill is calculated.
Remember, the more energy you use, the more you will pay. The energy price guarantee limits the amount you can be charged per unit of gas or electricity, so your exact bill amount will continue to be influenced by how much energy you use.
What does this mean for you?
Pre-payment meter customers
The energy price guarantee will be applied to the rate you pay for each unit of energy, so the money you put on the meter will last longer than would otherwise have been the case this winter. As is the case with the ‘price cap’ under the energy price guarantee there will continue to be a small difference between the unit cost for a pre-payment meter customer and other bill payers.
Standard variable tariff customers
The average unit price for dual fuel customers paying by direct debit will be limited to 34.0p/kWh for electricity and 10.3p/kWh for gas, inclusive of VAT, from 1 October. These unit prices have been passed to suppliers to ensure that they are used to calculate bills on time for 1 October. Energy suppliers will adjust standard variable tariffs automatically. Customers on standard variable tariffs do not need to take any action to get the benefits of this scheme.
Fixed rate tariff customers
For those customers on fixed rate tariffs, a ‘floor’ unit price for gas averaging at 10.3p/kWh and for electricity averaging at 34p/kWh for direct debit customers will also come into effect on 1 October 2022. Introducing a floor because some people will have fixed at much lower prices some time ago, meaning their annual payments will already be below the £2,500 average set by the Energy Price Guarantee. Unit price reductions of up to 17p/kWh for electricity and 4.2p/kWh for gas will apply to fixed tariff customers to bring their rates down to, but not below, the floor unit price. Customers on fixed rate tariffs that are already below the floor unit prices will continue to enjoy those low rates but will not receive a further discount for the duration of their fixed term.
For the small number of consumers who fixed at a high rate exceeding the October Ofgem price cap of £3,549, they will receive the full discount of 17p for electricity and 4.2p for gas. However, given the higher starting point, their fixed rate tariff will still have a unit rate that is above the EPG rates. This will ensure that a fair price is paid by everyone. Energy suppliers will adjust fixed tariffs automatically. Customers on fixed tariffs do not need to take any action to get the benefits of this scheme. Any transfer to a different tariff is a matter for suppliers.
Average standing charges will remain in line with the levels set by Ofgem for the default tariff cap from 1 October, at 46p per day for electricity and 28p per day for gas, for a typical dual fuel customer paying by direct debit.
If you’re not connected to the grid
Those households not on standard gas or electricity contracts, such as those living in park homes or on heat networks – and so outside the scheme – will be no worse off and will receive comparable support through a discretionary fund.
If you pay for electricity as part of your rent
The energy price guarantee is applied per unit of gas or electricity used for households with a domestic electricity connection, so will be applied if your landlord has a domestic electricity contract with a licensed electricity supplier.
Your landlord may be reselling the electricity to you based on your usage, in which case:
- they must comply with the maximum resale price rules which say they must not make a profit
- the maximum resale price for electricity is currently set at the same price as that paid by the person reselling it (see Ofgem’s guidance on ensuring customers are being charged no more than they should)
Your landlord may charge an ‘all inclusive’ rent, where a fixed cost for energy usage is included in your rental charges, in which case:
- they are encouraged to come to an agreement with you on the energy price guarantee in line with the arrangement in your tenancy agreement, the government are exploring a full range of options to ensure this happens, including using the planned emergency legislation.
- the landlord’s fixed charge may already provide you with similar protection from the impact of energy price increases
What can you do?
There are actions we can all take to help with rising energy costs:
Access free advice
Local energy charity Act on Energy offer free advice on heating your home, energy saving tips, understanding your energy bills and fuel debt. Act on Energy can provide advice and administer local funding with grants and schemes, subject to eligibly checks.
Speak with your supplier
Contact your supplier as soon as possible if you are worried about paying your energy bills or are in energy bill debt with your supplier. All suppliers must work with you to agree on a payment plan, this also includes reviewing a current payment plan you have previously agreed.
Look at where you could save energy
Try to reduce your energy consumption, without compromising your comfort and health, the more energy you use the higher your bills. The Energy Saving Trust have tips to help keep your household energy usage down. Including tips such as, switching off appliances when not in use and buying more energy efficient appliances when needing to replace.
In addition, you can try to improve the energy efficiency of your property, this will decrease the amount of energy you may require when heating your home.
Find more information on reducing your energy bills, improving your properties energy efficiency, renewable or low carbon energy measures and the grants and offers, return to our Warmer Worcestershire webpage, or contact Act on Energy for free advice on 0800 988 2881.
What support is available?
The government have announced a package of support to help households with the rising cost of energy bills. This includes,
Energy Bill Support Scheme
A £400 discount/credit on energy bills for domestic energy customers due October 2022, with the initial requirement for repayment being scrapped. For more information visit our Energy Bill Support Scheme section
Council Tax Energy Bill Rebate
A one-off payment of £150 to households living in council tax bands A to D, for more information visit our Council Tax Energy Bill Rebate 2022 section
Household Support Fund
A funding package to help vulnerable household this winter, for more information, to check eligibility and apply, please visit Act on Energy or call 0800 988 2881.
These are alongside the existing support that will continue,
Warm Homes Discount
The Warm Homes Discount scheme can provide a one-off discount from electricity or gas bills, with a qualifying criterion. The discount isn’t paid directly to the recipient but discounted off their energy bill through their supplier. The discount will not affect recipients receiving the Cold Weather Payment and Winter Fuel Payment. To check eligibility, contact your energy supplier and for more information visit Ofgem’s FAQ page.
Winter Fuel Payment
The Winter Fuel Payment automatically issues eligible pension age and benefit recipients with a payment between £100-£300 (depending on household and recipient circumstances) to help pay heating bills.
Cold Weather Payment
The Cold Weather Payment issues eligible benefit recipients with a £25 voucher for each 7-day period of very cold weather (7 consecutive days of the temperature being recorded or forecast zero degrees celsius or below) between 1 November and 31 March.
Act on Energy offer free advice on all energy related issues from bills to accessing grants and funding. For more advice and information on anything related to energy, call Act on Energy on 0800 988 2881