- By Kevin Peachey
- Reporter’s living expenses
A change to the energy price cap has gone into effect, reducing electricity and gas bills in the country – with a smaller, lower-than-expected drop this winter.
A household in England, Wales and Scotland using a typical amount of energy would now pay £2,074 a year, a reduction of £426 per year.
Analysts at consulting firm Cornwall Insight think the typical bill could drop to £2,000 a year this winter.
However, that number is still much higher than the pre-pandemic norm.
Charities and suppliers have warned that although prices are falling, there is still a risk that many people on a tight budget will struggle to pay.
The actual amount that households pay will vary depending on how much gas and electricity they use.
Energy UK, which represents suppliers, said companies have hired hundreds of additional staff to ensure support is available.
Government support, which capped bills at £2,500 in recent months, is no longer needed. There are no plans to offer a £400 discount on all government-funded bills last winter, although cost-of-living payments will continue to be made for low-income earners and recipients. certain benefits,
How the cap is set
Wholesale energy prices, and conversely, prices paid by customers have been high over the past 18 months.
Regardless of government intervention, energy regulator Ofgem sets the maximum price suppliers can charge customers per unit of gas and electricity. It applies to households with variable or default tax rates in England, Wales and Scotland.
Under the new cap, which starts on Saturday and lasts for three months, the unit price of electricity is 30p per kWh, with a flat fee of 53p a day. The gas unit rate is 8p per kWh and the flat fee is 29p a day.
The calculations for a typical household are based on a direct debit customer using 12,000 kWh (kilowatt hours) of gas and 2,900 kWh of electricity per year. A kilowatt hour is a unit of energy used to calculate your bill.
Although prices are falling, not everyone sees an immediate change in their direct debits.
Energy UK says suppliers are obligated to ensure payments – made smoothly throughout the year – are based on accurate and up-to-date information.
“Vendors are at different cycles when they evaluate a customer’s funds, so some will already be assessed. Customers should rest assured that when a provider updates their direct debit. , they will be contacted directly,” an Energy UK spokesman said.
Customers are encouraged to submit meter readings to ensure their direct debit calculations are correct.
About 29 million households are affected by the limit change, but there are some differences in typical payments. These include:
- Prepaid meter payers will now pay a similar rate as direct payers at £2,077 a year
- Those who pay by cash, check or bank transfer, usually every three months, will now pay more, with a price cap of leaving a typical bill of £2,211 a year
- In Northern Ireland, regulated separately, the bill is lower
Those who were eligible for vouchers as part of a government aid package, but didn’t claim them, will now miss out.
The deadline has passed to claim the vouchers, which were given to people who were unable to get the government’s £400 rebate on their bills last winter. They include those on some prepaid meters. Millions of pounds went unclaimed.
The charities say there are still concerns about how people will cover their energy bills. The National Energy Action, which lobbies for warm, dry homes, says 6.6 million UK households will remain in fuel poverty and have an “emergency” in need of government assistance for them.
Adam Scorer, the charity’s chief executive officer, said: “Without additional support, a lot of people will continue to carry unmanageable debt or try to survive in homes without a system. heating, causing disease, suffering, and avoidable death.”
An Ofgem spokesperson said: “This remains one of the most difficult and volatile periods in history for energy consumers. And while bills are still higher than before the energy crisis, then the great news is that people will see them drop.”
Here are some energy-saving ideas from environmental scientist Angela Terry, who founded One Home, a social enterprise that shares green, money-saving tips:
- Get a free water-saving shower head from your water company and use the shower instead of the tub
- Consider loft insulation, which she says costs around £460 for a typical townhouse and could save £355 a year on gas bills
- Do your laundry instead of using the tumble dryer and walk instead of driving when possible
- Use windy days to feel where drafts are in the house. Wet the back of your hand to help locate them, then use insulating or draft-proof tape
- If possible, press the smaller button to use less water to flush the toilet