Warning as rising energy price cap means higher energy bills - the one simple check that could save you money
Warning issued to households as the rising energy price cap means higher energy bills - here’s how to make sure you’re not paying more than you need to.
Households on a standard energy tariff are being urged to submit a meter reading to avoid paying higher energy bills. On Wednesday (October 1), the energy price cap will rise by 2% for a typical household in England, Scotland and Wales.
The rise could see an average household paying an extra £35 per year for gas and electricity, as the cap rises from £1,720 to £1,755, and comes as temperatures drop, with many households putting on the heating.
Online consumer site Uswitch calculated the average home on a standard tariff would spend £140 on energy in October compared with £63 in September, thanks to a combination of higher rates and increased usage.
Uswitch energy spokesperson, Ben Gallizzi, said: “Households should take a moment to read their energy meter in the coming days to avoid the possibility of being charged at October’s higher energy rates. Customers who don’t have a smart meter should submit their readings before or on Wednesday October 1, so their supplier has an updated – and accurate – view of their account.
“Energy billpayers can get ahead of October’s price hike by fixing at cheaper rates now. Currently, there are a range of fixed deals currently available that are around £215 cheaper than the October price cap for the average household. If you can switch to a deal cheaper than the October price cap, now is a good time to make the change. We urge customers to run an energy comparison as soon as possible.”
The increase comes despite wholesale prices falling by 2% over the three months prior to Ofgem’s latest price cap decision. However, standing charges – the figure consumers pay per day to have energy supplied to their homes – are set to rise by 4% for electricity and 14% for gas, or 7p a day, primarily driven by the Government’s expansion of the Warm Home Discount.
Around 2.7 million more low-income households, including 900,000 families with children, are eligible for the £150 Warm Home Discount this winter, after the Government confirmed it would remove the “hard to heat” eligibility criteria. The Government has said the change will see an estimated 6.1 million households receive the discount this winter.
Ofgem said the latest increase was also driven by an increase in electricity balancing costs – incurred by network operators to ensure a stable electricity supply for when there is both too much power and too little power in the system – adding around £1.23 a month to the average household bill.
The End Fuel Poverty Coalition said the latest increase represented a 2.21% year-on-year rise and meant energy bills would be 68% or £713 a year higher than in the winter of 2020-21.
Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.
The energy price cap was introduced by the government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use. It does not limit total bills because householders still pay for the amount of energy they consume.