New, more expensive energy tariffs have kicked in from October 1 for millions of households across Britain. Consumer Editor Chris Choi on the changes consumers need to know about
The energy price cap will rise by £35 a year from Wednesday for a typical household in England, Scotland and Wales.
The changes come as the weather cools and many people switch on their central heating, putting more pressure on household finances.
Uswitch calculated that the average home on a standard tariff would spend £140 on energy in October compared with £63 in September, thanks to a combination of higher rates and increased usage in autumn.
How will your bills be affected by this increase and why are energy costs going up?
How much is the energy cap going up by?
The energy bill for the average household will rise by 2% on Wednesday, October 1 in England, Scotland and Wales.
The increase in energy costs comes despite wholesale prices falling by 2% over the three months before Ofgem’s latest price cap decision.
How will it affect my bills?
Households paying by direct debit for gas and electricity will see their bills go from £1,720 a year to £1,755.
That’s an increase of £35 a year.
Debt charity StepChange says while the increase “seems like a small amount”, it has noticed a rise in households struggling to pay their bills.
The charity reported a 32% increase in average energy arrears among its clients seeking debt advice over the last two years.
Are standing charges going up?
The standing charges for electricity are set to rise by 4%.
Gas is also set to increase by 14% – that’s around 7p per day.
Standing charges are the amount consumers pay a day to have energy supplied to their homes.
The increases are primarily driven by the government’s expansion of the Warm Home Discount.
Can I reduce my bills?
Consumer group Which? has urged households still on a standard energy tariff to submit a meter reading as soon as possible.
Suppliers who have not received meter readings base their bills on estimated usage, meaning households could be overpaying, while others may not be paying enough.
They also suggest shopping around.
“As a rule of thumb, we’d recommend looking for deals cheaper than the current price cap, not longer than 12 months and without significant exit fees,” Which? Energy editor Emily Seymour said.
More than 6 million low-income households are also eligible to receive the Warm Home Discount this winter.
Why are energy costs going up?
Energy regulator Ofgem said the latest increase was driven by electricity “balancing costs” incurred by network operators.
It ensures a stable electricity supply for when there is both too much power and too little power in the system, adding around £1.23 a month to the average household bill.
Other factors include costs associated with the extension of the government’s Warm Home Discount scheme.Where can I go for help?
For anyone struggling or worried about energy bills, Simon Trevethick from StepChange said there is support available.
“Contact your supplier, check to see if you’re eligible for any grants,” he said.
That could include tailored repayment plans, which can help households regain control and avoid falling further behind, or providing emergency credit to reduce the risk of self-disconnection.
What is the energy cap?
The energy price cap, regulated by Ofgem, restricts the amount that energy suppliers can charge for each unit of gas and electricity and covers around two-thirds of homes in the UK.
Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets.
It does not limit total bills because householders still pay for the amount of energy they consume.
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