We welcomed last week’s highly anticipated announcement from Ofgem, that the Price Cap will reduce from the 1st of July. While we don’t want to be killjoys, the new average annual energy bill of £2,074 is still approximately double what it was before the start of the Gas Crisis. And we still had clients struggling when the typical bill was £100 per month. So we are a long way away from seeing any kind of return to normality.
The headlines for us are as follows:
Nothing is changing till the 1st of July
With every Ofgem announcement, we receive enquiries from people confused about why nothing’s changed on their energy accounts. Ofgem always makes its announcement with at least a month to go before any changes take effect.
The typical monthly payment due for combined gas and electricity will be around £175
This is based on an average annual consumption of 12,000 kilowatt hours for gas, and 2,900 kilowatt hours for electricity. Check your bills to see what your annual consumption is. If yours is higher, then you’ll pay more.
Prepay gas meter customers need to keep topping up through summer
If you pay by direct debit, you’re protected from seasonal variation as you overpay in the summer and underpay in the winter. If you use a prepay meter then you have no such protection, and your bills will rise significantly in the winter months. Some residents are happy to accept this, as they get to pay nothing during the summer. However, the average daily rate is staying at 29p for gas meters, which is £8.80 per month. If you’ve turned off your heating and think you won’t need to top-up again till September/October, you may well find your meter is in arrears, and you’ll need to clear this before any money you top-up actually provides you with gas. We have clients falling into this trap every Autumn. We would encourage everybody to keep topping up as much as they can, as often as they can, to protect against this, and maybe even provide themselves with a bit of a financial cushion against the coming Winter.
Switching is returning, slowly…
Some energy suppliers have dabbled with tariffs that are better than the Price Cap. But these tend to be only for existing customers, and limited in terms of how many people can take advantage of them. Some suppliers have announced tariffs available to customers of other suppliers. These are unlikely to be promoted via price comparison websites, so customers will likely need to approach suppliers directly. We’ve already heard anecdotally of some unscrupulous conduct, with door-knockers encouraging residents to fix to deals that aren’t the best choice financially. We’ll always advise against doorstep selling of energy. The best deal cannot be calculated right now, without an accurate picture of how many kilowatt hours the household uses per year, and ideally some better idea of what the Price Cap is going to be in October and January. Cornwall Insights (the team that Martin Lewis uses for his energy predictions) suggest our bills are likely to drop a little in October, and rise a little in January. So if you do want to fix for peace of mind, then you’re probably going to be safe if you fix around the level of the upcoming price cap, which looks like this:
|
Fuel |
Price per kilowatt hour (p) |
Daily Charge (p) |
|
Electricity |
30 |
53 |
|
Gas |
8 |
29 |
Please note these prices will vary by region and we’ve not yet seen what that will mean for Cheshire & Merseyside
You can read the statement from Ofgem here: https://www.ofgem.gov.uk/publications/customers-pay-less-energy-bills-summer
