The Government has extended the end of its energy bill support programme, giving us all much-needed breathing room. Energy saving specialists advise switching energy providers and taking full advantage of any saved credit.
Another significant adjustment to our finances could occur in June.
Before terminating this summer, the energy price guarantee (EPG), which shields consumers from the full impact of rising wholesale energy prices, will remain at the current level.
Even though the EPG won’t rise in April as initially scheduled, now is hardly the time to celebrate. At the end of March, all households will no longer receive the monthly Cost of Living subsidies that were provided to assist with their energy costs.
The average dual fuel energy bill will rise from £2,500 to $3,000 as a result of the increase, said Gareth Kloet, a spokesman for the comparison website Go Compare Energy.
Many people in the UK will already be paying too much for their energy, so contemplating an additional 20% increase will be difficult, he claims.
Regarding the government’s energy policy, none of us can really change much. But by comprehending the promise and altering our utilisation, we can lower our own expenditures and maintain our financial stability.
How the EPG functions
The conflict in Ukraine is largely to blame for the sharp increase in energy prices. The EPG ensures that we won’t be charged more than a specific rate for our energy, shielding domestic energy from some of these hikes. Costs over these caps are covered by the government.
What’s going on this summer?
The energy guarantee will remain in place until June 2023, and as a result, the average home will spend about £2,500 year for gas and electricity. The annual energy bill for the typical home would have increased to $3,000 under the original plan to expand the EPG’s permissible limits. That represents a 20 percentage point increase.
Although the exact rates we will pay starting in June have not yet been determined, it is expected that both the unit price for gas and electricity as well as the “standing fee,” a daily fixed sum that we all pay for gas and electricity, will increase.
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You will not receive any additional assistance with the higher prices since the £400 extra financial aid that we have all been receiving for our energy expenditures, primarily in the form of monthly discounts from our suppliers, expires in March.
What will occur if prices decrease?
Currently, the EPG shields us from excessive energy wholesale prices, but energy prices have been declining. Hence, even if the EPG is set at £3,000, we can wind up paying less for energy later on in the year.
The energy company Cornwall Insight believes that in the third quarter of this year, costs will drop below the promise. The average annual cost of gas and electricity, according to its projected statistics for the price cap—a rate set by energy regulator Ofgem—will be £2,362 per year, which is lower than even the present guarantee. The cap on energy prices is set once every quarter, and energy providers.
It’s possible that if the ceiling is reduced, we will wind up paying less for our energy than the guarantee, but there is no assurance that this would be the case.
Now what should I do?
It seems sensible to budget for this since it appears likely that sooner or later we will all be paying more per unit for our energy bills. But, as Mr. Kloet of GoCompare notes, the increase might be related to drier and warmer weather.
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He calls it a “little saving grace,” saying that we will naturally utilise less energy. But, he advises adopting other measures, such as giving your energy supplier monthly metre readings, to guarantee that your bills are accurate.
Over the long, chilly winter, many of us will have used up any remaining credit with our energy providers. Even so, Mr. Kloet advises either keeping the credit with your energy supplier or, if you ask for it back, placing it in a different savings account to use as payment for your energy bill.
“Consider putting into practise any energy-saving suggestions you may have postponed during the winter. Many of those activities are simpler to perform in the summer than they are in the winter. For instance, updating or replacing boilers, replacing windows and doors, or flushing radiator systems to increase efficiency,” he continues.
Also, you might think about changing providers if wholesale rates decrease. According to the EPG, there is now little incentive to transfer providers because they all charge the same amount.
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But, Kate Mulvaney, senior consultant at Cornish Insight, believes that more affordable energy plans, including fixed pricing options, will become available in the second half of this year.
The big picture
While a decline in energy costs can offer some solace once the guarantee is removed, nobody anticipates prices to reach extremely low levels any time soon. In fact, Cornwall Insight predicts a little increase in energy unit prices in the year’s final three months.
This means that we should all start acting right once to make our homes more energy efficient and to make sure we keep a look out for any competitive tariffs that might be offered.