On 1 April 2022, energy bills are going to skyrocket. So what can we do about it?
Wholesale fuel and energy costs have been increasing for a long time. These rising costs have been absorbed by companies, some of which went under due to the disparity between the rising wholesale costs and unable to pass these on to the consumer.
Watch this video to listen to Martin Lewis gives advice on taking a meter reading.
It’s important to educate yourself on what’s going on with the increases in both April and October of this year, and also look at how to reduce the cost of living given that so many costs are increasing.
Smart Meter / Top Up Meter
If you have a smart meter this should all be done for you, but it’s worth taking a look at your reading anyway. Top up meters mean that this will be all done manually. Take a photo of your actual usage.
The price cap isn’t on the amount you pay but on the unit price.
Currently, the price cap is £1,277 and will go up to £1,971 on 1 April. However, the cap is on the unit price, not the price of your bill.
We hear a lot of talk about “the energy price cap” – what is it?
The energy price cap is the maximum amount a utility company can charge an average customer in the UK per year for the amount of electricity and gas they use. It is set by Industry regulator Ofgem to help consumers pay a fair price for their energy.
The cap is on standard variable and default tariffs set by regulator Ofgem.
How much is the energy cap going to increase?
Energy regulator Ofgem has announced that the energy price cap will rise by 54% from 1 April 2022.
The current energy price cap lasts until 31 March, before rising a further 54% on 1 April.
Energy regulator Ofgem has just announced that the energy price cap will rise by 54% from 1 April 2022. The guide is that it will increase from £1,277/year to £1,971/year for those paying by direct debit. So that’s an increase of £693/year which is tripling an average bill. Ouch.
Octopus Energy announce its customers will pay £50 below the price cap
ExistingOctopus Energy customers will see their bills increase to £1,921 instead of £1,971. Outlined is the communication sent out from Octopus energy to their customers.
Octopus may be known for customer service and green energy, but affordability is absolutely fundamental to us:
absorbed around £100 million of this wholesale price increase without passing it on to customers
set aside £2.5 million in additional funding to help customers struggling to pay
bought thermal cameras and lent them to customers for free, prioritising those who need the most support
invested £1 million in our Winter Workout programme, helping customers use less gas this winter
What happens if my supplier goes bust?
If your supplier does go bust, the Ofgem safety net means you won’t lose supply, you’ll be moved to a new firm, and your credit is protected. The risk is one of delay, hassle and losing any cheap tariff you’re on, instead of being moved to the price cap.
How does the energy price cap work?
The price cap is a temporary measure. This is while Ofgem and the government introduce other reforms, such as faster switching and smart meters, which will make the market work better for everyone. It’s Ofgem’s task – as the energy regulator we’ve been given special duties by the UK government – to set the level of the cap during this time. Every six months we work out how much it costs a supplier, on average, to get the energy to you. We then revise the cap level to reflect this to ensure you pay a fair price and to protect against overcharging. Suppliers must cut their prices to the level or below the cap we set.
#MeterReadingDay – Top Tips
So, do you have any advice for people who are worried at the moment?
Educate yourself on what’s going on, and look to decrease the amount of energy (electricity and gas) you use over the summer months, before the winter when we will look to increase our usage once again.
Take a meter reading today!
If you are not on a smart meter, then take a reading today by taking a photo of it to be able to prove it to your supplier. Otherwise, your company might estimate these charges, which may prove more costly.
Smart Meter / Top Up Meter
If you have a smart meter this should all be done for you, but it’s worth taking a look at your reading anyway. Top up meters mean that this will be all done manually.
Energy Bills Rebate
Millions of households will receive up to £350 to help with the cost of living following a rise in the energy price cap.
All domestic electricity customers will get £200 off their energy bills from October, with 80% of households receiving a £150 Council Tax rebate from April.
Chancellor Rishi Sunak announces a £9.1 billion Energy Bills Rebate to support families with rising global energy prices.
The warm home discount provides £140 respite to around 2.2 million homes.
You may be eligible for a warm home discount, so do check to see if this applies to you.
Check out what benefits, hardship funds and allowances you are eligible for.
Warm Home discount
Council Tax support or hardship funds
Struggling to repay
Get help! Speak to energy firms and access to a hardship fund
Talk to a charity or organisation if you are unable to pay your bills