The big news at the moment is obviously the massive price increase recently announced by Ofgem, the UK's energy regulator.
Rising global fossil fuel prices have been blamed for the increase to consumers with the wholesale cost of energy quadrupling in the past year and the recent conflict in Ukraine likely to impact this further.
What is the price cap
Ofgem's price cap was introduced in 2019 to stop anyone on a variable tariff from being ripped off. It’s linked to market prices so if wholesale prices rise, so does the cap and vice versa.
If you are lucky enough to be on a fixed term for your gas and electricity rates then you don’t need to worry right now unless that fixed-term ends soon. Everyone else can expect an increase of up to 54% on their bills from 1st April 2022.
What this means is that people will pay an average of £700.00 more per year for their gas and electricity usage.
Those on pre-payment meters will also be impacted with a price cap increasing by £708.00 from £1,309.00 to £2,017.00 on 1 April 2022.
The price cap limits the rates you pay rather than the overall bill. So, if you use more energy, you will pay more, and if you use less, you will pay less.
In response to the price cap increase, the government announced some measures to partly help with the steep rise which include:
- A one-off £200.00 credit on electricity bills in October 2022. But beware that you will pay this back through an annual £40.00 instalment each year for five years, so it is not a freebie.
- A £150.00 council tax rebate paid in April for those in properties with council tax bands A to D. This does not need to be paid back.
- A £144million fund to local authorities to help low-income and vulnerable households who do not pay council tax or are in council tax bands E to H.
- A small expansion of the Warm Home Discount scheme so that it will now help between 800,000 to 3,000,000 households in total.
What can you do?
First and foremost is the make yourself, and your household as energy-efficient as possible. Turning off any appliances instead of leaving them in standby mode can save up to £30.00 per year and simply turning off lights when you leave a room can save around a further 320 a year, so a few changes can quickly add up to savings. Have a look at this guide from the Energy Saving Trust for more information and tips for reducing your energy consumption.
I am worried I can’t afford higher energy bills
If you are worried about not being able to make payments it is important that you speak to your supplier. They are required to take your financial situation into consideration and can often set up reasonable payment plans to help make this more affordable. You may also be eligible for schemes, grants or benefits – have a look on the Ofgem website for more information.
Middlesbrough Environment City, a local charity, can also provide free independent advice with support available to help you understand tariff checks and switching suppliers, how to read your smart meter and how your energy bills are calculated.
We understand that increasing living costs are a real worry for many of our tenants and are always here to help. If you would like to arrange an appointment to discuss rental options, including advice on monthly rental budgets, get in touch with us today.