Energy bills are inevitable. Everyone pays them, and they can take a chunk out of your budget every month. Energy price hikes are coming, and this could mean even more of your monthly income goes towards paying these bills.
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Why energy prices are increasing
The energy price cap will rise from the start of October. Those on default tariffs will see an increase of £139, from £1,138 to £1,277, the sector’s regulator Ofgem announced last week.
Prepayment customers energy bills will increase by £153 – from £1,156 to £1,309.
The rise will affect those on standard energy tariffs and prepayment meters. This is around 15 million households in England, Wales and Scotland.
The energy cap is the maximum price suppliers can charge customers on a standard tariff. It takes into account the wholesale price of gas and electricity, which accounts for about 40% of your bill. The remaining 60% covers your provider’s other costs, as well as some profit for the company.
The benefits of switching energy providers
Switching providers could help you avoid the energy price hikes.
You will save the most money if you haven’t switched providers or tariffs for a long time. Some households could save hundreds of pounds a year just by changing providers.
With energy prices increasing, your new quote might not be much lower than your current rate. However, if your current bills are set to increase by around £140, you’ll still end up saving money.
There’s a lot of energy price comparison tools out there and it might be difficult to work out which to trust.
A good place to start is the list of accredited price comparison websites on the Ofgem website. You can find the best deal for utilities in your area plus details of prices and any potential discounts available.
Look out for electricity tariffs where the price you pay is lower during off-peak hours – some providers cut the cost of energy at night, so if you run appliances during those hours, this type of deal might help you cut costs.
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Other ways to avoid energy price hikes
Consider your usage. If you reduce how much energy you use, you can lower your bills – or at least avoid the energy price increases.
There are many ways you can lower your energy usage. As a bonus, you’ll be helping the environment too!
For example, could you set your thermostat a couple of degrees lower and wear a jumper, so you don’t notice the difference?
Another good idea is to make sure your appliances are switched off when you’re not using them. Don’t leave them on standby.
According to Uswitch, UK households waste £227 million a year just by leaving appliances by standby. That’s the equivalent of £80 per household. It might not seem like much, but it will make up over half of the £140 energy price increase!
You might qualify for help to make your home more energy efficient. If you’re on certain benefits you could qualify for measures like getting loft insulation installed for free. Speak to your energy provider if you think you might be eligible.
You could also consider the government’s Green Homes Grant. This scheme should offer households vouchers of up to £5,000, or £10,000 if they claim benefits, to pay for energy efficient home improvements, like installing heat pumps. The deadline for work to be completed has been extended until 31 March 2022.
What to do if you’re struggling to pay your bills
Speak to your provider if you’re struggling to pay your energy bills. You may be able to agree a repayment plan or find a cheaper alternative tariff.
You may also be able to benefit from the government’s warm home discount scheme. Those eligible can apply to receive a one-off £140 discount on their electricity bill, usually between October and March.
You’ll be deemed eligible for the scheme if you’re on the guaranteed element of pension credit or your meet the criteria to fall into the low income category.
