More than four million UK households on standard energy tariffs are being urged to submit meter readings before Thursday, October 1, to avoid paying higher prices. The energy price cap will rise by 4% for a typical household in England, Scotland and Wales, just as cooler temperatures prompt many to switch on central heating.
The increase will see the average household paying by direct debit for gas and electricity reach £1,723, up £5 a month or £60 a year if sustained over 12 months, as reported by ChronicleLive.
Why the price cap is rising
Ofgem said the increase reflected higher wholesale gas prices as a result of the ongoing conflict in the Middle East, with volatile global markets remaining the dominant driver of price changes. Comparison site Uswitch warned households without smart meters to send in readings to their supplier by the end of the month to avoid being charged higher rates for energy used before October 1.
Homes on a standard tariff with average usage are expected to spend £145 on energy in October, compared with £109 in September. The increase of a third is down to a combination of increased usage due to cooler temperatures and higher unit rates under the latest price cap.
How to avoid higher charges
Ben Gallizzi, energy expert at Uswitch.com, said: “Submitting a meter reading, if you don’t have a smart meter, before or on Thursday October 1 will ensure the energy used is charged at the correct rates and not estimated by a supplier. That same deadline applies for the 15 million households on standard tariffs wanting to beat the hike entirely by locking in a lower-rate fixed deal before energy costs rocket for winter.”
Ofgem changes the price cap for households every three months, largely based on the cost of energy on wholesale markets. The energy price cap was introduced by the Government in January 2019 and sets a maximum price that energy suppliers can charge consumers in England, Scotland and Wales for each kilowatt hour (kWh) of energy they use. It does not limit total bills, as householders still pay for the amount of energy they consume.
Advice for struggling households
Ofgem says savings could be available for people by choosing a fixed tariff, and many suppliers offer tariffs with cheaper electricity to smart meter customers for electricity consumed out of peak times. It adds: "It's also worth considering different payment methods, with prepayment customers paying the lowest price cap rates, and could save consumers an average of about £45 compared to direct debit."
Ofgem further urges anyone struggling with their bills to reach out to their energy supplier as soon as possible in the first instance. Suppliers should support customers to agree affordable repayment plans, which can help households regain control and avoid falling further behind, and offer routes to financial assistance and advice.
