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Predictions of another huge energy price hike are rife, but when do energy bills go up and how much more will you have to pay?
Following the 54% increase in the energy price cap (opens in new tab) that came into effect in April, families have been concerned about how much their energy bills will cost (opens in new tab) should the price cap rise again. It has just been announced that the 80% price cap increase that was due to come into effect on 1st October has been replaced by an energy bill freeze (opens in new tab).
The ongoing energy crisis has seen the wholesale price of energy quadruple in the last 12 months. There are many complex reasons why energy prices are going up (opens in new tab), but ultimately, this means it costs suppliers more to buy the energy they sell and those price increases have to be passed along to customers.
Jonathan Brearley (opens in new tab), CEO of energy regulator Ofgem, said: “I know this situation is deeply worrying for many people. As a result of Russia’s actions, the volatility in the energy markets we experienced last winter has lasted much longer, with much higher prices than ever before. And that means the cost of supplying electricity and gas to homes has increased considerably.”
When do energy bills go up and how much will they go up by?
Energy bills for millions of people on their supplier's default or standard variable tariff were due to go up on 1 October 2022 when the new energy price cap was slated to come into effect. However, new Prime Minister Liz Truss has announced that typical households will pay no more than £2,500 for their energy each year for the next two years.
This is in place of Ofgem's planned cap increase that would have seen average annual bills based on typical usage rise from the current level of £1,971 to £3,549. Bear in mind that if you use more energy than average, you could end up paying more than the new cap.
Those on a fixed rate tariff will not see a change in their energy bills unless they are moved on to a default or variable tariff once their fixed rate comes to an end. But it might be worth speaking with your energy supplier to see if you would benefit from being moved onto a standard or default tariff, and whether you can move without paying an early exit fee.
Editor's note: The calculator below is in the process of being updated in light of the announcement of an energy bill freeze.
What help is available for families struggling to pay their energy bills?
To help with rising energy bills, from October, almost all households will get a £400 energy rebate (opens in new tab). Low income households who receive certain means-tested benefits will also get an extra £650 cost of living payment (opens in new tab), the first instalment of which should have already been received. But if prices continue to rise, experts argue that more support is needed to help families cope with the price hikes.
Dr Craig Lowrey (opens in new tab), Principal Consultant at Cornwall Insight said: “It is essential that the government use our predictions to spur on a review of the support package being offered to consumers. If the £400 was not enough to make a dent in the impact of our previous forecast, it most certainly is not enough now. The government must make introducing more support over the first two quarters of 2023 a number one priority.
"In the longer-term, a social tariff or other support mechanism to target support at the most vulnerable in society are options that we at Cornwall Insight have proposed previously. Right now, the current price cap is not working for consumers, suppliers, or the economy.”
If you are struggling to pay your bills, you’re not alone and help is available (opens in new tab). Speak to your supplier in the first instance. You might be hearing about the Don’t Pay UK campaign (opens in new tab) which is encouraging people to boycott paying their energy bills from 1 October unless the government intervenes to lower prices to an affordable level, but make sure you are aware of the risks of not paying your energy bill - it could have a long-lasting negative impact on your finances.
If you are on a time of use tariff that means your electricity is cheaper at night (opens in new tab), you might find that you can benefit from switching to a standard tariff instead. Speak to your supplier to find out more.