The energy price cap will rise from £1,738 to £1,849 with effect from April, heaping yet more financial pressure on countless already stretched households.
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 your usage, so those who live in large properties or who consume a large amount of energy could see annual bills much higher than £1,849, while those in smaller homes could pay less.
A fall in wholesale prices led to a fall in the energy price cap for July to September, but three increases in October last year and January and April this year are a real worry for most people, and especially for millions of pensioners who no longer qualify for the Winter Fuel Payment if they aren’t claiming benefits.
Ofgem blamed inflation and steeper wholesale energy prices for the latest increase.
Steve Vaid, chief executive at the Money Advice Trust, the charity that runs National Debtline, said: “The impact of high energy prices is clear to see. Energy arrears are now the second most common debt we are helping people with, behind only credit cards. This latest price rise will only add to the challenges many people face in keeping up with their bills.”
If you’re worried about ever-increasing 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 help can I get with energy bills?
Those on low incomes may be entitled to some help with energy costs.
For example, you may be eligible for a £150 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 if you’re claiming certain benefits such as Pension Credit. 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.
You should receive these payments automatically, so there’s no need to apply.
It’s vital to check whether you’re eligible for Pension Credit as soon as possible as it could not only provide you with valuable retirement income, but it may also help you qualify for these benefits, as well as the Winter Fuel Payment (payments have already been made for last winter, but if you qualify for Pension Credit you can claim it this coming winter). You can find out if you’re eligible for Pension Credit and how much you can get using the Gov.uk Pension Credit calculator.
If you do qualify, you can make a Pension Credit claim by phone using the Pension Credit claim line on 0800 99 1234. If you’d rather make a paper application, you can request one on the above number, or you can download and print a Pension Claim form here. Find out everything you need to know about Pension Credit in our guide Pension Credit explained and about how the Winter Fuel Payment works in our article Winter Fuel Payment: who is eligible, and how can I claim? If your home is badly insulated, you might be eligible 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:
How can I reduce my energy costs?
Making a few simple changes around your home could 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 tariffs are usually suppliers’ most expensive tariffs and energy customers should be able to save by switching to a cheaper fixed rate deal.
At present, there are growing numbers of fixed rate tariffs that are available to new and existing customers, so it’s worth checking whether you might be able to move to a cheaper deal.
Gareth Kloet, spokesperson for Go,Compare energy, commented on the news: “With the new energy price cap coming into effect on April 1 we would encourage customers to review their energy options and consider the best plan for their individual circumstances. When it comes to switching providers, there are options available which could potentially help save you money.
“It’s well worth researching the deals available as there are many options out there, and some could save you money – whether you decide to opt for a fixed-rate tariff so you aren’t affected by energy price fluctuations, or you opt for a variable rate.
“We recommend looking closely at your contract before making a change, as your current energy provider may charge you an exit fee and this will need to be taken into consideration when working out any potential savings – though it may still be worth switching.
“Take time to look at your current tariff, your average energy use and your monthly costs and look on a comparison website to see if a cheaper option is available. It’s also a good idea to take a meter reading at the start of each month, even if you have a smart meter, as it will ensure your energy usage is as accurate as possible.”
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?
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.
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