This spring, the most vulnerable households could face a substantial financial blow. This is because the energy price cap is set to increase in April 2022. Families on a tight budget could struggle to cover the costs of energy price rises on top of debts, food and other household bills.
If you’re concerned about skyrocketing bills in 2022, here’s how you could prepare yourself.
What is the current energy price cap?
The current energy price cap for those on the standard variable or default tariff is £1,277. And though this rate is protecting many households from rising power prices, it’s still the result of a 12% increase that came into effect in October 2021.
Note as well that the energy price cap is based on the maximum amount an energy supplier can charge an average user. If you use more, you’ll definitely pay more.
What is the energy price cap forecast?
The forecast for the energy price cap isn’t looking good. The chances are high that the rate will rise in April 2022 due to rising wholesale power prices. These price increases have resulted in many energy suppliers going out of business this year. According to trade body Energy UK, energy costs may rise as much as 50% in spring.
What can you do to prepare yourself for a rising energy price cap?
There are three things you can do right now to prepare for energy price increases.
1. Cut back on energy use
It might be time to start making changes, such as cutting back on energy use to save money. This might help you reduce the impact of power price increases and the soaring cost of living. You could start by making a habit of turning off appliances or devices that are not in use.
2. Understand your heating needs
Different homes have different heating requirements. Factors like high ceilings and the number and size of windows may impact how your home retains heat.
It might be important to hire an energy audit specialist to get a professional report on your energy needs. The specialist will also be in a position to give you advice on how to make improvements to reduce heating costs.
For example, you could save money in the long run by making insulation improvements. You can also develop a better understanding of your heating system and how long you need to leave it on, what temperature you need to set it to and the best times to turn your heating on and off.
3. Compare different energy suppliers
Switching to another energy supplier could help you beat the price cap and save you money – but not always. Just make a habit of comparing different energy prices or suppliers annually using a comparison site.
You could also try to secure a fixed deal with a lower rate than the price cap, especially now that the forecast shows an increase is highly likely.
However, some experts are warning that fixed deals might be much more expensive currently, which could make finding a suitable deal challenging.
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