BILLPAYERS will soon pay £426 a year less towards their energy bills in a major change to the price cap.
The energy regulator Ofgem confirmed last month that the typical gas and electricity bills will be capped at £2,074 a year from July 1.
The price cap is changing tomorrow
The cap sets a maximum limit on what suppliers can charge customers per unit of electricity and gas.
This will take effect when the government’s Energy Price Guarantee, which limits the typical domestic energy bill to £2,500, ends today (June 30).
It means that the fall in the price cap will reward households battling the cost of living with a £426 annual saving.
Although people are paying less, they’re still paying more than what they were a year ago.
Bear in mind that although there is a cap, costs will depend on your own usage.
It marks the first time consumers on default tariffs have seen prices fall since the global gas crisis took hold more than 18 months ago, Ofgem had previously said.
While the drop is good news for billpayers, much of the support provided to customers will also end tomorrow.
Thousands of people on prepayment meters have just hours left to claim their free £400 vouchers through the Energy Bills Support Scheme.
But there are things you can do ahead of tomorrow to make sure you aren’t paying more than you need to.
Here’s what you should do:
Take a meter reading
An updated meter reading will mean your supplier has better idea of your usage.
It means it’ll then be able to charge you fairly.
Energy suppliers usually require you to take regular meter readings from your gas and electricity meter to work out how much they should charge you.
Customers that don’t do this have their bills calculated by an estimated usage and will likely pay more.
Therefore, it is worth working out how to take a meter reading to ensure you’re not overcharged.
If you don’t have a smart meter it’s wise to get these numbers in ASAP.
Those with smart meters don’t need to send a manual reading because they’re sent to suppliers automatically.
We’ve explained how to take and submit a meter reading.
Consider switching to a direct debit
households will still end up paying £138 more per year from Saturday compared to those who pay by direct debit or through a prepayment meter.
For most, the cheapest way to pay your energy bills is via direct debit.
From July 1, a typical household that pays their energy bill by direct debit will pay the following rates:
- 7.51p per kilowatt hour (p/kWh) for gas
- 30.11p/kWh for electricity
- A standing charge of 29.11p per day for gas
- A standing charge of 52.97p per day for electricity
It means that a household with typical usage can expect to pay £2,073.98 a year.
This is based on the average household using 12,000kWh of gas and 2,900kWh of electricity every year.
But those who pay on receipt of their bills will sadly pay more.
They can expect to pay £2,211.63 across the same period.
This is because these households will have to pay the following unit rates and standing charges:
- 7.91p per kilowatt hour (p/kWh) for gas
- 31.72p/kWh for electricity
- A standing charge of 34.34p per day for gas
- A standing charge of 59.51p per day for electricity
These charges are issued to households who pay by credit, debit card, cheque and standing order.
The simplest way to avoid these higher rates is to switch to direct debit.
You can contact your energy company to discuss this change.
Check and challenge your bill
If you pay your energy bill by direct debit, then it is assumed that this monthly amount should be “fair and reasonable”.
If you don’t think it is, you can complain directly to your supplier in the first instance.
If you’re not happy with the outcome you can take it to the independent Energy Ombudsman to dispute, but there are a few steps before you get to that stage.
Your supplier must clearly explain why it’s chosen that amount for your direct debit.
If you’ve got credit on your account, you have every right to get it back – although some experts recommend keeping it there through the summer, so your bills don’t go up in the winter when you use more energy.
Your supplier must refund you or explain exactly why not otherwise and the regulator, Ofgem, can fine suppliers if they don’t.
If you are disputing a bill, taking a meter reading is a must.
If it’s lower than your estimate, you can ask your provider to lower your monthly direct debit to a more suitable amount.
But beware so you don’t end up in debt later on with a bigger catch-up bill at the end of the year from underpayments racking up.
If you don’t have success in negotiating a lower payment then you can put in a complaint to the Energy Ombudsman.
Redeem leftover energy bill discount vouchers now
Millions of households in England, Scotland and Wales have had a £400 energy discount on their bills paid over winter.
The help was paid in instalments worth £66 in October and November, and then £67 between December and March 2023 as a discount on energy bills.
But those on traditional prepayment meters were sent vouchers to redeem at their local top-up point instead.
Over £130million worth of this cash support remains unclaimed, according to the latest figures.
Eligible households need to make sure they claim the vouchers NOW before they expire.
If you’ve lost any unredeemed vouchers, you can get them reissued for free.
To get the credit, customers just need to take their voucher, their top-up key or card and proof of address with them to any Post Office branch.
Check if you qualify for support
Millions are also in line to receive cost of living payments worth up to £1,350.
The first instalment of the £900 payment has been paid to millions on certain benefits, including Universal Credit and Pension Credit.
Meanwhile, a £150 payment is currently being issued to millions with disabilities.
Plus, pensioners who are entitled to a Winter Fuel Payment for winter 2023/24 will get an extra £150 or £300 paid on top of their normal payment later this year.
Energy suppliers also offer plenty of energy grants and schemes to help you out if you’re struggling.
Here’s a list of schemes open right now:
- British Gas Energy Trust Individuals and Family Fund
- British Gas Energy Trust
- EDF Customer Support Fund
- E.ON and E.ON Next Grants
- Octopus Energy Assist Fund
- OVO Energy
- Scottish Power Hardship Fund
There’s a one-off fuel voucher from your energy supplier if you’re on a prepayment meter.
What is the energy price cap?
The price cap on energy bills was introduced in January 2019 as a way to prevent households being ripped off by their energy suppliers.
It is currently £3,280 a year on average.
But households only pay £2,500 a year on average, as the price is overruled by the energy price guarantee, which is cheaper.
However, this will fall to £2,074 from July when the price guarantee finishes and the energy price cap comes into force.
Energy analysts say regulator Ofgem’s yearly price cap will drop to £1,978 from October.
Cornwall Insight, which has made accurate predictions throughout the energy crisis, has forecast the October drop. But it expects energy bills to rise again from next January to £2,004.
It affects around 29million customers on default or variable tariffs, according to the regulator Ofgem.
The cap is calculated based on the wholesale price of gas and electricity.
It also includes allowances for tax, charges paid to the energy networks, green levies and social payments.
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