Ritika Janiya
Energy bills are set to rise in October for households in Great Britain, as Ofgem, the energy regulator, increases its price cap by 10%. That means more of households’ money is leaving their wallets and going to gas and electricity. Under the regulator’s plans, the average annual energy bill will go up to £1,717—£149 from the current level of £1,568.
Energy Price Cap
The energy price cap says there’s a maximum charge that energy suppliers can charge customers, set by Ofgem. It is reviewed every three months and is supposed to protect people who do not switch their energy providers from paying too much. It was introduced in 2019 to prevent people from overpaying on their bills.
Although indelicately referred to as a “cap,” depending on how one makes payments and their geographies, different caps exist. For instance, if one pays with standard credit, which entails getting a bill and paying later, one cap is higher than when paying through direct debit or a prepayment meter.
For customers paying with standard credit, the average cap will rise by £161 to £1,829.
What Will That Mean for Your Bill?
Of course, your bill very much depends on how much electricity you use. The new cap is set using average usage, so, for example, if you use much more electricity than this, you will get a different bill. The price will come at 24.5p per kWh for electricity and 6.24p per kWh for a gas prepayment customer.
There are additional standing charges, to simplify the explanation, fees that you will pay daily no matter how much energy is consumed. These will go up slightly to 60.99p per day for electricity and 31.66p per day for gas from October 1. You pay these charges even if you do not use energy. This works out at around £6.50 a week, or roughly £338 a year.
Why Are Standing Charges Rising?
Five years ago, the amount of the standing charges would have been much lower at around £182 per year. But now, it has then increased significantly. They are all charges toward the maintenance of the energy infrastructure, wages and salaries of staff, and running of programs or schemes by the government, for instance, the warm home discount.
Rising standing charges are a concern for lots that this will hit those using minimal energy or on low incomes. Ofgem is working on a new arrangement to tweak these charges and it may cut them by £20 to £100 yearly. They are also proposing to move some of the costs into the unit price, however, which may make bills for some households go up.
Price Comparison
It is lower than it was for the previous winter but still higher than before major global events such as Russia’s invasion of Ukraine. Last year, it was £1,834 for the last quarter of the year and then increased to £1,928 in January. In 2021, before the crisis, it was £1,216.
Help from the government, including cost-of-living payments, were withdrawn. Pensioners also lost their winter fuel payments, up to £300, that helped pay for heating
Can I Get a Better Deal?
Yes, you are. Some energy suppliers are offering deals that are cheaper than the new price cap. For example, Outfox the Market offers one called “Fix’d Dual Aug24 v4.0” at about the level of the current cap, and so it would therefore undercut prices in October. Many of the larger providers offer fixed-rate plans below the new cap, and some variable-rate plans from companies like EDF are also cheaper.
Warning: some tariffs will have exit fees., payable if you leave them before the end of the deal.
What help can I get?
You can still get a winter fuel payment if you receive pension credit. You can also get £25 per week of cold weather payment if the temperature falls to 0°C or below every day for seven continuous days, from November 2024 to March 2025.
There is also the warm home discount, in which up to £150 is knocked off your electricity bill if you qualify for it. The energy Companies also run their own funds to help struggling customers, while the British Gas Energy Trust extends help to those with other energy suppliers. One must apply for these grants if in need of assistance.
You can understand these changes in order to manage your bills better for energy and save money as well. Keep an eye out for better deals and look for the available options for support to offer help in order to alleviate the impact of the increasing energy cost.
