How to Read Your Bill, Energy Price Cap Explained
The energy price cap in Great Britain’s energy market is one of the essential tools that protect consumers from high energy tariffs. Ornned by the energy regulator, Ofgem, for the current fiscal year, this cap defined the highest price the suppliers can set for each gas and electricity unit to over 29 million consumers.
The cap was launched in the summer of 2019 and it was designed to protect the consumers who did not engage in a direct switch and used the rolled-over guaranteed rates, from being charged too much. Nevertheless, as energy prices rose higher and companies reduced their sizes, the cap became the standard tariff for the majority of households. Nevertheless, it is quite odd to call it ‘one’ cap since there exist several caps, and they differ depending on the geographical location and the method of payment chosen. For instance, consumers who use the standard credit method whereby they pay after using electricity and gas face higher caps than those who through direct debits or prepayment meters.
The standard variable rate price cap for households will rise by £161 to £1,829 from October 2024.
What Will ClickCharge Cost You Under the Price Cap?
The actual can be different from the estimated amount depending on the amount of energy that you consume as your energy bill depends on this factor. Even though gas and electricity providers are to some extent free to choose the actual amounts within the cap, most of them offer tariffs that are very similar to the Ofgem numbers. Starting from 1st of October the unit price for electricity will amount to 24. 50 kg and for gas it is £5p per kWh. New Electricity Price Tariffs of $ 0. 24p per kWh to direct debit customers only.
However, the standard tariffs – the charges you are expected to pay upfront even when you use no energy, are also to be marginally increased. The standing charge for the customers who opt for direct debit will be 60. 99p per day for electricity and 31. 66p a day for gas which costs a total £338 each year. These charges are fixed and have to be incurred regardless of the amount of energy that is being consumed.
Will Standing Charges Continue to Rise?
Standing charges have significantly increased over the years, rising from £182.27 annually about five years ago to the current rate. These charges cover various costs, including infrastructure, staff salaries, and the warm home discount for vulnerable households.
Concerns have been raised for there to be changes that will ensure that even if a family downs its energy consumption, it will not be faced with higher costs than before. Ofgem launched a consultation last November and recently cleared that it is possible to cut the standing charges between £20 to £100 per year.
One of these plans is based on the idea of relocating some of the standing charges to the unit price. But it could raise energy bills by 10 percent for about 500,000 low-income earners and affect those who use more electricity. Ofgem is also encouraging the suppliers to introduce tariffs that either have no standing charges or low ones, but these would come with higher unit rates suggesting that the effective use of power would have a more significant effect on the total cost of tariffs.
However, the current energy charges relative to the energy charges of the last year are quite interesting.
The cap set for October to December 2024 is minimally lower than in the previous quarter, though still significantly more than pre-crisis. For instance, the cap in October 2021 was £1,216 up until the Russia-Ukraine war escalated and raised global energy prices.
There has also been a cut on government help on energy bills; such as cost of living vouchers for high-risk groups, which were capped at £300 in the previous year. Cost of Living payments have been axed, pensioners have also lost their cost of living payments, and the winter fuel payment is means-tested. Earlier, all the state pensioners used to be paid this money but this is no longer the case as now only the additional benefits aged pensioners will be paid.
Can you get a better energy deal?
A helpful guide for understanding your energy tariff and how to possibly negotiate a better one for yourself.
Yes, you can always look around to see what other offers other companies have before you can be certain that the deal on offer is the best that is available in the market. Other energy companies have returned to the market with tariffs that are below the new price cap.
Other large suppliers also have available fixed price plans that are beneath the new threshold and some large suppliers, namely EDF, still have variable tariffs that remain well below the new ceiling at the moment. Nonetheless, these offers are often accompanied by fees one will be charged when they switch the provider before the fixed or the discounted period is up.
What Help Is There for Reducing Energy Costs?
However the government funding has been cut, there is still hope for those who are having some issues to pay for their energy bills. Freezing and cold helping payments remain available to pension credit pensioners, and vulnerable households, and they could receive the cold bedroom payment at £10 for every week which means the average temperature in your area falls to 0 C or below on 7 consecutive days between 1 November 2024 and 31 March 2025.
The warm home discount scheme offers purchases an automatic £150 deduction to their electricity accounts depending on the customer’s eligibility. Also, many energy providers provide support funds for their customers; and the British Gas Energy Trust also assists those who are with other suppliers. To be able to get these grants, one will have to approach the provider’s fund directly.
Knowing about the price cap of the energy tariff along with ways and the offers available for the consumers can help one in controlling the energy bills and can even save money on it.
