Brits across the country are preparing for a sharp rise in living expenses. These fears come after Ofgem recently announced a significant energy price cap increase that will take effect in April this year.
However, a recent report from Hargreaves Lansdown has revealed that some homeowners should be more worried than others. Those who will be hit the hardest by the price cap increase could see their bills soar to more than £4,000. So, who are these unlucky homeowners?
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Who will be hit the hardest by the price cap increase?
The energy price cap is the maximum limit that a supplier can charge for their tariffs. Although energy suppliers could technically charge under the price cap, most providers charge the highest possible prices in order to keep up with the rising costs of fuel.
In April, the energy price cap will rise by 54% to £1,971! As a result, homeowners across the UK will be hit with exceedingly high energy bills. While the increased price cap will affect all energy customers, some Brits will be hit harder than others.
According to Hargreaves Lansdown, those living in inefficient homes will see their bills increase the most. Markedly, those living in the most inefficient homes could see their bills rise to as much as £4,729 per year!
In the UK, inefficiency is rated by the energy rating system. As a result, houses are given an EPC (energy performance certificate) which can be used to prove the energy efficiency of their home. The system rates houses from A to G, with A indicating high efficiency and G indicating high inefficiency.
If your home currently has a G rating, you may be one of the unlucky few whose energy bills will increase to the level suggested by Hargreaves Lansdown once the new price cap is in place.
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How to beat the rising costs of energy
For many, the proposed annual increase is more than an entire month’s wage. Therefore, those living in the hardest-hit homes should look into any help that may be available.
As Sarah Coles explains: “It’s worth investigating whether there is any help available. Check whether your supplier’s warm home discount is still open for applications and whether you qualify, because this can provide £140 off your energy bills.
“You should also check whether you qualify for a grant from your provider or your local council – both of which have specific support schemes for people who are struggling.”
Government energy bill support
Rishi Sunak has announced a package of support that could cut your energy bills by up to £350. All UK domestic energy users will receive £200 off of their bills in October and a further 80% of households will receive a £150 tax rebate from April. While this may not completely cover the price hike, any reductions are sure to help!
The £200 energy bill rebate will be automatically deducted from your bills your energy supplier. However, the monetary support will need to be paid back from 2023, when energy prices are expected to decrease. Homeowners will be expected to pay back the rebate in five £40 instalments. These instalments will be applied automatically to your energy bills from 2023, which means that you don’t have to actively pay back the loan.
Furthermore, those living in houses that have an energy rating of A to D will receive an additional £150 rebate that should be applied automatically.
Warm home discount scheme
As well as the energy rebates, some households may be eligible for the warm home discount scheme. This is a government scheme that offers deductions of £140 from your energy bill between October and March. The scheme is provided to those on lower incomes or those who receive the Guaranteed Credit element of Pension Credit. If you think that you may be eligible for the discount, you should contact your energy supplier.
Switch your energy supplier
Every UK household will receive a £200 rebate. However, if you are unable to qualify for any additonal help, simply switching to a different energy provider could cut down your bills. Different providers offer varying packages with unique benefits that could end up being cheaper than your current energy supplier.
Use direct debit
If you’re not already, it is worth switching to direct debit payments to pay your energy bills. This is because those who pay via cash or check are charged an extra £130 per year! To switch your payment method, simply contact your energy supplier and ask to make the change. Some suppliers may also offer the option to do this online.
