Millions of households face a struggle to pay their bills as the higher energy price cap is expected to push bills up to an average of £4,200 next year.
Consultancy firm Cornwall Insight predicted that bills will soar to around £3,500 in October, from £1,971 previously, before rising even further by January.
And customers could see their bills increase before the expected energy price cap rise in October. Industry regulators have warned that it’s “possible” suppliers will raise customers’ direct debits before the new cap on energy prices kicks in.
Speaking to the BBC, an Ofgem spokesperson said that direct debits are usually charged in a way so that customers build up “credit” during the warmer summer months when usage is lower, to spread out the cost of using more energy in the winter.
“It’s therefore possible for direct debits to increase ahead of a price cap rise or even when a customer’s use has remained constant,” the Ofgem official said.
Speaking to the Today programme this week, Martin Lewis, of Money Saving Expert, warned that direct debits were going to “start rising pretty much immediately on 26 August before the new prime minister’s in place”.
“As soon as the announcement is made from Ofgem on 26 August, that crystallises the direct debits going up,” he said.
The government announced an energy bill support package in May worth at least £400 to all households. But the scheme will not cover the full cost of expected price rises in the coming months.
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With energy usage now a pressing concern for millions, here are some of the top tips from Lewis and other experts on how to save on your gas and electric bills.
Here are some of the top tips from Lewis and other experts on saving on your gas and electric bills in the coming months.
Check for energy deals – and avoid the ‘cons’
The cost-of-living crisis is “leaving many household budgets under strain”, said Ruth Jackson-Kirby on MoneyWeek. “If you are in this position, there are frankly no easy answers, but it’s important to look at anything you can do to offset rising bills.”
One of the first things you should do is to check if you are paying too much for your electricity and gas, Jackson-Kirby added. The high prices of wholesale energy means it may not be possible to get a better deal by switching now, but it’s still “worth checking in case you are on an exceptionally poor tariff”.
Switching energy firms “used to be the top tip to save money”, said The Sun. To make sure you’re getting the best deal avoid these four “energy cons” as firms try to trick you into paying more: estimated usage, different names for standard tariffs, hiding variable tariffs, and fixed deals.
Some fixes are cheaper than the predicted October price cap, but the ones worth considering are “few and far between” with most deals for existing customers only, said Martin Lewis on MoneySavingExpert.com. He added that there were no open market fixes worth switching to unless customers were willing to pay over the expected increase for “price certainty”.
Lewis said that if you factor in future price predictions and more energy use over the winter, customers on average will be paying around 96% more over the next year for energy bills than they do now. If a customer is offered a fix at no more than 95% above your current price-capped tariff it could be “worth considering” if customers value “budgeting certainty”.
But he warned that his calculations were only estimates and that energy prices remain uncertain, adding there was nothing wrong with “playing safe and sticking on the price cap” for most customers.
He advised those struggling to pay energy bills to contact their gas and electricity provider as soon as possible.
Energy saving tips at home
With a “big chunk” of family budgets being spent on energy bills, “it makes sense to look for ways to reduce the amount of gas and electricity you use”, said Mehdi Punjwani on MoneySuperMarket. An average home of four occupants now uses 13 electronic appliances compared to just four in 1990. However, despite owning more appliances there’s “still a lot you can do to reduce energy consumption – and save money”. Punjwani’s top ways to save energy at home include:
- Turning off standby appliances
- Install a smart thermostat to make heating more efficient
- Turning down your thermostat
- Buy efficient appliances
- Install a new boiler
- Wash clothes at a lower temperature
- Be smarter about water
- Invest in double glazing
- Draught-proof your property
- Insulate the roof
- Monitor your usage
Norton Finance has ranked six energy saving home improvements to reduce bills, the Daily Express reported. Mid-terrace households could save nearly £5,500 on fuel bills within five years if they use these cost-effective “hacks”: draught-proofing, roof insulation, wall insulation, boiler upgrade, and double glazing.
One hack is to buy a £3 roll of self-adhesive draught-excluding tape to “block up unwanted gaps around windows, doors and chimneys that let cold air in and warm air out”. Doing this could save around £370 after five years.
Rhiannon Philps, a financial writer for NerdWallet, also shared her top tips for saving energy and reducing fuel bills. “Now is the time to make those changes that could help to cut your gas and electricity bills,” Philps said. “While you can’t do anything to lower the cost of energy, you can reduce the amount you use in your home to save money and help the environment at the same time.”
Included in her 42 top energy-saving tips are:
- Don’t charge your phone overnight
- Boil the kettle once for the water you need
- Consider using a pressure cooker
- Only heat the rooms you’re using
- Use natural light
- Get an energy-efficient external door