The October energy price cap means that 22 million consumers’ energy prices will rise 42% in October. The government has announced its new price cap will be £1,137 per year higher than previously expected, but families don’t have to wait until August when the official increase will be announced before making preparations to protect themselves against these rising energy prices.
Here are some tips on how you can start preparing your finances now.
The big questions
- How much will prices rise?
- Who will be affected?
- Why is this happening?
- What can you do to prepare?
- What are the long-term implications of this price hike?
- Is there any good news?
- Where can I go for more information?
The energy price cap will have a major impact on 22 million households across the UK who, up until now, were mostly shielded from higher energy costs. The worst hit households are those that use a lot of electricity (over 5,000 kWh per year). The average annual cost will rise by £829 and monthly bills could increase by around £69 per month when Ofgem’s measures come into effect.
The higher energy costs will affect all families using electricity, gas or oil. But in different ways and to varying degrees. The worst affected will be those who use large amounts of electricity because they run appliances that are energy-inefficient or they have more than one inefficient appliance (such as an outdated boiler) in their home.
These heavy users can easily increase their bills by hundreds of pounds per year. However, as prices rise for all households so too do opportunities for saving money and reducing your energy consumption which can help avoid sharp rises in your energy bill each month!
If you’re worried about rising energy prices then we’ve put together some essential tips below that could help you avoid sharp rises in your energy bill each month!
The first thing to know
The energy price cap is a limit on how much energy suppliers can charge consumers for their gas and electricity. This price cap is set by the government and is reviewed every six months. The next review will be in October, when the price cap is expected to rise by 42%. This means that the average household energy bill will increase by £829 per year.
In addition to increasing your cost of living, rising energy prices can also have a negative impact on your personal finances. Consider ways you can save money on energy bills now so you’ll be prepared when energy prices rise.
For example, you could install a smart meter if you don’t already have one which enables you to monitor your energy usage around the house. You can also invest in thermostatic radiator valves so you aren’t heating rooms which are empty, and making use of a smart thermostat to control your heating schedule.
Government aid
The Government has introduces a Cost of Living Support package to help with skyrocketing energy expenses. This programme will offer all English, Scottish, and Welsh families £400 to offset the energy cap hike.
This money will be deducted from your energy bills over six months, commencing in October. Low-income families will get £650 in July and September. The Cost of Living Support package is available to those who receive one of the below:
- Child tax credit
- Income Support
- Income-based JSA
- Income-related ESA
- Pension Credits
- Universal Credit
- Working Tax Credits
Pensioners will receive a one-time stipend of £300, while those age 66 or older will see their energy expenses reduced.
Although the government is providing some assistance, it fails to account for the earlier energy price increase from 2022. The assistance package ends when the price ceiling increases in April 2023.
The price limit hikes have resulted in fuel poverty for 6.5 million households.
5 Ways To Save Money On Your Next Bill
- Check if you’re on the best energy tariff; Ofgem estimates that 60% of people are overpaying for their gas and electricity. Use a comparison site to see if you can switch to a cheaper provider.
- Make your home more energy-efficient: Small changes, such as turning off electronics when you’re not using them and making sure your home is well-insulated, can make a big difference.
- Get a smart meter: Smart meters show you how much energy you’re using in real-time, so you can adjust your usage accordingly. Many suppliers will install one for free.
- Use less energy during peak times: Peak times are usually between 4pm and 8pm on weekdays.
- Get a second meter installed: This is only recommended if you want to make a lot of money, as it’s an expensive procedure. A company will install a new meter that measures how much energy you’re giving to your neighbours for free. Then, you can give them back some of your unused energy during peak times and recoup some extra cash.
You can also look to switch to green energy options. Approximately 60% of UK people said increasing energy spend made them switch to renewable energy solutions such as solar panels or heat pumps.
To find out more about renewable energy, take a look at the options available to you with GEC Power.