On the 3rd Feb, Ofgem announced that the energy price cap would be increasing by £693 in April this year. That is a staggering increase of 54%, up from the previous increase of 12% last October. With families already facing a cost of living crisis, increasing interest rates, the huge rise in energy bills in April is leaving people feeling extremely worried.
The Energy Price Cap explained
The Energy Price Cap is set by Ofgem, the UK’s energy regulator, twice a year: April and October. It sets the maximum that customers can be charged on a standard variable tariff for each unit of gas and electricity used. A 54% increase in April will see the default tariff go from £1,277 a year to £1,971 a year. The increase will affect around 22 million people.
The reason behind the huge 54% increase is the record rise in global wholesale gas prices since August 2021. Since then, over 20 suppliers have gone bust, affecting over 2 million UK customers. If your energy supplier has gone bust, you can find more information and advice on the Citizens Advice webpage.
What support is available if I’m struggling with my energy bills?
Chancellor Rishi Sunak outlined what the government would be doing to support those struggling amidst the energy and cost of living crisis. They announced £350 in support for the majority of families, which included a £150 Council Tax rebate this April for bands A to D, and a £200 discount on energy bills from October, which will be paid back over the course of five years from April 2023. Councils are also to receive a £114 million discretionary fund for those on low-incomes who don’t qualify for the Council Tax rebate.
Currently, there are a range of benefits and grants available if you are struggling with paying your energy bills. The Warm Homes Discount scheme offers £140 of your electric bill over the winter months if you receive either the Guarantee Credit element of Pension Credit, or you’re on a low income and meet your supplier’s ‘broader group’ criteria. The government also announced on the 3rd that they would be expanding eligibility for this discount by a third.
The Winter Fuel Payment is a one-off payment, between £100 and £300, to those born on or before 26 September 1955, and Cold Weather Payments are one-off payments for anyone receiving Pension Credit, Income Support, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Universal Credit or Support for Mortgage Interest.
You can find out more about grants and benefits on the webpage.
What do I do if I owe my energy supplier money?
The sooner you seek out help and support for dealing with debts, the easier your situation will become, and the easier it will be to deal with.
You should speak to your supplier as under Ofgem rules, they are obliged to help you. You should negotiate a payment plan with them that suits you and your finances – your supplier must take into account how much you can afford to pay and how much energy you’ll use in the future.
You may be able to pay your energy debts back through your benefits using the Fuel Direct Scheme
Is there anything I can do to try and lower my bills?
Being more energy efficient can help you a great deal in lowering your bills. For example, did you know that turning your thermostat down by one degree can save you around £65 a year?
Other ways you can be energy efficient include turning your electrical devices and appliances off stand-by mode and remembering to turn off your lights when they’re not in use. Spending one less minute in the shower can save you £5 a year per person, and cutting back on washing machine and dishwasher use can save you around £10 a year for each appliance.
You can get more tips for saving energy and money from the Energy Saving Trust.
At CABB, we are able to provide personalised energy advice. Our advisers are able to support you to look at the available options for your circumstances.