Data from price comparison site Quotezone.co.uk shows that energy bills rose by 17% over the course of the pandemic. The increase is down to lockdowns as well as working from home. But with many of us opting to work (at least partly) from home for the foreseeable, here’s what rising wholesale prices mean for you and what you can do to reduce your energy bills.
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How do wholesale costs affect energy bills?
Wholesale costs shape the prices we pay for our energy. In early 2020, those prices took a huge tumble as the world tried to make sense of what was going on. Despite that, and last year’s brilliant spring weather, energy bills crept ever upwards as lockdowns extended into the long winter months.
In their sample of more than 50,000 energy comparisons, Quotezone.co.uk found that 59% of people listed their energy use as ‘high’ as the pandemic rolled on. Annual energy bills went from an average of £688 in 2019 up to £802 in 2020.
However, increases in wholesale prices mean that we can also expect to see energy costs rise too. In fact, energy regulator Ofgem, announced earlier this year that the energy cap will rise and revert back to pre-pandemic levels.
Commenting on energy prices, Greg Wilson, Founder of Quotezone.co.uk, said: “With working from home becoming an increasingly viable option, it comes as no surprise that energy usage has increased, resulting in less cash in consumer pockets.
“Although we’re hopefully entering the last phase of the pandemic now, which coupled with better weather means people should increasingly begin to venture outdoors, this does not necessarily mean that our energy bills will start to go down.
“Over 15 million homes will be affected by Ofgem’s recent announcement that price caps will rise from April, showing that the next six months will prove critical for many consumers who want to spend less and start saving.”
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So, how can I reduce future energy bills?
The energy cap protects consumers from spiralling energy costs.
Its increase means a rise of £96 (to £1,138) for consumers on their supplier’s default energy tariff. For anyone with a pre-payment meter, it’s an £87 rise to £1,156. Nevertheless, there are ways to keep costs down and reduce energy bills.
Switch energy provider
There’s a good reason why comparison sites exist. And that’s to help you find the best deals around. Figures from Ofgem, reveal consumers can save around £360 every year just by changing provider.
Not only can switching help you reduce your energy bill overall, but it’s also an opportunity to seek out better customer service and explore green options too.
Turn down your thermostat
It’s an oldie but a goodie. Turning down the heat by just a single degree can reduce annual energy bills by around £60, according to the Energy Saving Trust.
Make your home energy efficient
This can take a bit more effort but will help you make continued savings. Changes can start small, for instance, draughtproofing windows and doors or using LED lightbulbs. For more ideas, take a look at these 10 ways you can reduce your fuel costs.
Apply for tax relief
If you’ve had to work from home during the pandemic, you can currently claim up to £6 per week for extra household costs. This includes gas and electricity as well as metered water and business calls. To find out if you’re eligible, visit the gov.uk website.
More household money-saving tips
As well as changes indoors, changes outdoors can have a surprising impact on energy costs too. For practical ideas, check out these eight garden tips that can help you save money.
Plus, to keep on top of utility bills, here’s what you need to budget for along with a seven-step budget checklist to help you keep finances in check.