The energy price cap will rise from £1,568 to £1,717 with effect from October 1, just when many of us might be thinking about putting the heating on again.
The price cap, which was introduced by the energy regulator Ofgem in 2018, limits what a supplier can charge on their standard variable, or default, tariff. The cap is based on the price per kWh of electricity and gas that can be charged. It isn’t, however, a limit on total bills, as these depend on usage, so those who live in large properties or who consume a large amount of energy could see annual bills much higher than £1,717.
A fall in wholesale prices led to a reduction in the energy price cap for July to September. However, news that bills are on the rise again will be a huge worry for countless households, especially pensioners who aren’t on benefits and will no longer be eligible for the Winter Fuel Payment this winter.
The increase in prices is due to the ongoing war between Russia and Ukraine and a rise in demand for electricity driven by extreme weather conditions. This has caused a spike in wholesale energy prices, driving up costs for both suppliers and customers.
If you’re worried about energy prices, read our article The energy bills crisis: what can you do about soaring costs?
Here, we explain what the price cap means for you and what you can do to keep energy costs down.
What is the government doing to help?
Government support with energy bills ended in April 2023, meaning many people are likely to struggle to make ends meet. It paid every household a total of £400 to help with bills, with the money paid in six instalments from October 2022.
Steve Vaid, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “Rising energy prices come at a difficult time for people who are already struggling with their bills, as winter hits and energy usage goes up.
“With energy arrears already at record levels, the Government must act to provide support to households in difficulty. The Help to Repay scheme we have proposed, which would provide repayment matching and debt write off options, is urgently needed and could help hundreds of thousands of households currently trapped with unmanageable energy arrears.
“Anyone struggling with their energy bills, or worried about their finances, should contact National Debtline as soon as possible – our advisers can help.”
What help can I get with energy bills?
You may be eligible for a £140 discount off your energy bills under the Warm Home Discount scheme, if your supplier belongs to it and you are receiving the Guarantee Credit element of Pension Credit, or you’re on a low income and receive certain means-tested benefits.
To check which energy suppliers offer the discount, you can visit GOV.UK.
During periods of particularly cold weather, you may also qualify for Cold Weather Payments of £25. These are made when your local temperature is recorded as (or forecast to be), an average of zero degrees celsius or below for at least seven consecutive days between 1 November and 31 March every year.
If you are already receiving any other low-income benefits (i.e. Pension Credit) then you should be eligible to receive it – and if you are, you should receive it automatically, so there’s no need to apply.If your home is badly insulated, you might qualify for help to make improvements that will make it more energy efficient and keep you warmer.
You can use the links below to find out more about schemes that may be available to you depending on where you live:
- England – The Simple Energy Advice website
- Scotland – Home Energy Scotland
- Northern Ireland – Energy Saving Grants in Northern Ireland
- Wales – Nest Scheme
Find out more in our guide Are you eligible for help with heating costs?
Save £200 on the UK's No.1 Solar System
Use code SUN200 to get £200 off your solar installation, exclusive to Rest Less members. Join 10,000+ happy customers and get your instant online price now.
Enjoy expert installation in 2-3 weeks by the best-qualified engineers, with low-cost monthly payments and the best rates available.
How can I reduce my energy costs?
Making a few simple changes around your home can help reduce your energy bills.
For example, according to the Energy Saving Trust, you can save around £35 a year just by remembering to turn your appliances off standby mode, whilst cutting back your washing machine use by just one cycle per week can save you £8 a year on energy.
Similarly, hanging up your wet clothes to dry rather than using a tumble dryer is an easy way to reduce your energy consumption and could save you up to £70 per year, according to Ovo Energy.
Learn more in our article Energy saving tips: how to reduce your bills.
If you’re currently on your energy provider’s standard or default tariff, it’s worth checking whether you might be able to switch to a cheaper deal. Default energy tariffs are usually suppliers’ most expensive tariffs and in the past many energy customers have been able to save hundreds of pounds by switching to a cheaper fixed rate deal.
However, steep global energy costs have meant that suppliers have been unable to offer deals significantly lower than the price cap.
At present, there are still relatively few fixed rate tariffs that are available to new and existing customers, although numbers are increasing.
Gareth Kloet, spokesman for Go.Compare Energy, said: “From a billpayer’s perspective, the news of the energy price cap is always a good reminder to think about your current energy contract – especially now the market is slowly opening up and there are some deals available.
“Before you look around, remember to take a look at your energy usage and the rates of your current deal. It’s also worth checking if there are any early exit fees involved with your current contract, as you may have to pay to leave, which could cancel out any potential savings. Comparison sites will help you take stock of your choices and see the options on the market for you, whether you want to opt for a flexible or a fixed rate tariff.”
If you’re considering switching your energy provider, it’s worth doing plenty of research so you can be certain you’ve found the best possible deal to suit your needs. Comparison websites such as MoneySuperMarket, Uswitch and Compare the Market enable you to compare the latest energy tariffs, whether you’re looking for a fixed or variable deal.
What if I can’t pay my bills?
If you’re finding it impossible to cover your energy costs, get in touch with your supplier as soon as you can and explain that you’re having financial problems. They are obliged to give you advice on how to pay back the money you owe and should suggest a repayment plan that will still leave you enough money to live on. If you’re struggling with energy debt, your supplier might be able to offer a grant to help repay this. Find out more in our article Is your energy supplier offering grants to pay off energy debts?
Don’t worry that a missed energy bill will be followed by disconnection – it won’t.
You may be told by your energy provider that your gas and electricity supply could be disconnected if you haven’t paid a debt after 28 days of being notified. However, usually your supplier will offer a variety of options to repay your debt, rather than disconnect you, such as a repayment plan or prepayment meter.
Find out more in our guide What can you do if you can’t pay your energy bills?
Save £200 on the UK's No.1 Solar System
Use code SUN200 to get £200 off your solar installation, exclusive to Rest Less members. Join 10,000+ happy customers and get your instant online price now.
Enjoy expert installation in 2-3 weeks by the best-qualified engineers, with low-cost monthly payments and the best rates available.
Where to find advice
Working out how you’ll cover energy bills can feel overwhelming, and if you are struggling it’s a good idea to seek professional advice as soon as possible.
There are plenty of free sources of advice available and many charities and organisations can help you negotiate debt repayment plans with your creditors on your behalf. These include:
- Citizens Advice – 0800 144 8848 (England) 0800 702 2020 (Wales)
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000
- PayPlan – 0800 280 2816
Whatever happens, don’t suffer in silence, as struggling with debts on your own can take a real toll on your mental health. If you are finding it hard to cope, our article Are money worries affecting your mental health? explains where to go for help if you need someone to talk to.
Rest Less Money is on Instagram! Check out our account and give us a follow @rest_less_uk_money for all the latest Money News, updated daily.