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What is happening to energy prices in the UK?
The energy Price Cap in the UK is set to decrease from £3,280 to £2,074 from July 1, 2023. This is due to a fall in wholesale energy prices. The Price Cap is the maximum amount that energy suppliers can charge their customers for gas and electricity. It is reviewed every three months by Ofgem, the energy regulator.
It is important to note that the Energy Price Cap is only for default tariffs. Households who have switched to a fixed tariff may be paying a different price, and this does not apply to businesses.
Will my bill fall drastically?
So whilst the cap is falling by £1,206, in fact the Energy Price Guarantee set by the government of £2,500 means that in fact the average house hold bill will fall by £426 in a year.
However, this time last year, households in council tax bands A to D (around 70% of all homes) had £150 knocked off their Council Tax bill in April 2022, and in October 2022 every household received £400 off their bill spread over 6 months, meaning that realistically, people won’t feel any richer!
Does this mean that mean I will never pay more than £2,074 a year from July 1?
This is where the cap confuses people – whilst it is often quoted as a £2,074 cap on bills, there is no such cap!
The Price Cap sets a maximum price that you can be charged for each killowatt hour that you use – but this does mean that if you use more, you will pay more, and a lot of people will see their annual bill rise above the oft-quoted £2,074 a year.
What about those on prepayment meters?
The Price Cap now also applies to those on prepayment meters at the same level as other tarrifs.
How can I reduce my energy bill?
There are two main ways to reduce your energy bill – everybody can be looking to reduce their bill, but those in a vulnev
Reduce energy usage
I feel by now, everybody is a bit of an expert on this, but here are some perhaps rather obvious ways to use a bit less energy
- Turn off lights when you leave a room. This may seem like a no-brainer, but it’s one of the easiest ways to save energy.
- Unplug (or switch off at the plug) appliances when you’re not using them. Even when they’re turned off, appliances can still use energy if they’re plugged in.
- Wash clothes in cold water. You can save a lot of energy by washing your clothes in colder water instead of hot water. If you usually wash at 40, consider going down to 30 or even 20.
- Take shorter showers. You can save a lot of hot water by taking shorter showers.
- Air-dry your clothes. Instead of using the dryer, air-dry your clothes whenever possible – outside!
- Upgrade your insulation. If your home is poorly insulated, you’re losing a lot of energy to the outside. Upgrading your insulation can help you save money on your energy bills.
- Install a smart thermostat. A smart thermostat can help you save energy by automatically adjusting the temperature of your home when you’re not there
- The Energy Saving Trust offers a range of free advice and support on how to reduce your energy use and save money on your energy bills.
Get help with bills
Now this little section is for those who are really struggling to actually pay their bill.
- Contact your energy supplier. Many energy suppliers offer discounts or grants to help low-income customers pay their bills
- Contact your local council. Whilst the £150 rebate doesn’t appear to be happening again, your council may be able to help.
- The Warm Home Discount Scheme. This will re-open in October 2023, so keep an eye out for it!
- The Cold Weather Payment is a government-funded scheme that provides a £25 payment to low-income households when the temperature falls below zero degrees Celsius for seven consecutive days.
- The Citizens Advice Bureau can provide advice and support on a range of financial issues, including energy bills. I highly recommend contacting them – even if you think there will be no help, you have nothing to lose by trying. They have a webchat or give them a ring on 0808 223 1133.
You could also switch to Octopus Energy and get a free £50 – they are my supplier and have made sure they are always charging slightly below the cap. They haven’t released their rates for July yet, but I will update this post when they do.
If you are already with Octopus Energy, here is the link for if you are struggling to pay your bills – I helped a family member get 20% knocked off their energy debt and set up a payment plan due to them being in a vulnerable position.
Will bills go down even more?
Ofgem has predicted that the price cap will fall again in October 2023, to £1,967. This is based on current wholesale energy prices. However, it is important to note that wholesale energy prices can fluctuate, so the actual price cap could be higher or lower.
The price cap is expected to remain at £1,967 until April 2024. After that, it will be reviewed again and could rise or fall.