Energy bills to rise by £149 – what are the tips to save money?
Energy bills will go up by 10% in October, meaning 28.4million households will be paying about £149 more a year.
Ofgem, the energy regulator, determines how much utility companies can charge customers – the maximum suppliers can charge is known as the energy cap.
The cap, expressed in terms of how much the average home would pay, has risen from £1,568 to £1,717, Ofgem announced today.
This cap will be in effect from October 1 to December 31 as Ofgem announces a new cap every three months.
What is the energy price cap?
Although it’s called a ‘price cap’ this isn’t a cap on how much your bills will be.
Most homes won’t pay bang-on £1,717 a year as the figure is based on average energy use.
Bills can very much exceed or fall well below this estimate and vary depending on energy use, location and the type of metre someone has.
Ofgem (Office of Gas and Electrical Markets) does the maths to figure out what energy suppliers can charge people.
This includes setting the price per unit of electricity and natural gas and slipping other charges into the bill like operating costs, maintenance fees and subsidies for clean energy.
From October 1, the unit rate for electricity will be 24.50p per kilowatt-hour, for a standing charge of 60.99p per day – this is the fixed daily fee you pay, even if you use no electricity.
Gas, meanwhile, clocks in at 6.24kWh and now has a standing charge of 31.66p per day.
How can I lower my energy bills?
‘Today’s price cap increase will come as a blow to many households, many of whom are already struggling with the high cost of living,’ Amy Knight, personal finance expert at the financial comparison website NerdWallet UK, told Metro.co.uk.
‘While cutting down on energy use can help save money on bills, this isn’t always an option.
Instead, focus on getting more value from the money you spend heating your home.’
Here are Amy’s top tips to keep fuel bills low this winter:
Consider carefully before you switch energy provider
If you’re thinking of switching energy provider, discounted rates for new customers can lead to savings. But, take note of when the introductory period ends to avoid a nasty shock when your bill jumps up again.
If you’re already on a fixed deal that’s more expensive than the price cap, it may be worth seeing if you can switch to a cheaper variable tariff or a cheaper fixed deal. But, if you do decide to leave your current fix, you should first check if you need to pay any penalty fees.
Ask for a refund if you’re overpaying into your energy bill by direct debit
If you’re several hundreds or even thousands in credit, your direct debit is probably set too high.
You can ask for a refund of most of the balance and adjust your direct debit to be lower. Be aware that it is normal to be in credit this time of year because most households use less energy in the summer versus the winter when we have the heating on.
How hot do you need your water?
Heating water uses a lot of energy, so you can turn down the flow temperature of your boiler to shave a little off your bills.
As long as the water from your hot tap is comfortable to have a bath in, you don’t need to set it any hotter. You can do this manually or you may be able to ask a heating engineer to fit a device called a ‘weather compensator’.
Remember where warm air comes from
Keep radiators uncovered to maximise the benefit when they’re on. If you have long curtains covering your radiators, leave them open to make sure the warm air circulates into the room, not out of the window.
Look at the label
When shopping for a new appliance such as a washing machine or fridge, look at the efficiency ratings. If your budget can stretch to A or B-rated white goods, these can help lower your energy usage long term.”
Why are energy bills increasing?
One reason for the price increase, Ofgem says, is that the wholesale price of energy has risen.
Wholesale costs are paid by suppliers and have risen by about 20% in the last few months largely due to Russia’s invasion of Ukraine, according to experts.
To reflect that, wholesale costs will represent about 43% of a typical bill – from £613 last quarter to £736.
Ofgem officials whip out their calculators every few months to ensure people pay a ‘fair price and to protect against overcharging’.
But campaigners worry that, amid a years-long cost of living crisis, seeing yet more of their bills going up is not the news people wanted to read about this morning.
This price hike is yet another blow to the 6,500,000 in fuel poverty who, like every other bill payer in the UK, are still forking out 65% more than they did for their energy than at the start of the crisis,’ said Fiona Waters of the anti-poverty charity Warm This Winter.
‘Meanwhile, energy companies have been profiteering, making more than £470,000,000,000 since 2020. That shows there is money in the system but that is going to energy bosses and their shareholders when it needs to go to ordinary people.
‘Today just highlights the Government’s policies on renewables and energy efficiency are needed to mend this broken system but we also need help now to get everyone of all ages through the winter ahead.’
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