Even as summer approaches, concerns over energy bills are dominating readers' worries. On July 1, 33 million people on standard variable tariffs will see a 13% increase in their energy costs. Every three months, Ofgem updates its price cap, which sets the maximum suppliers can charge per unit of gas and electricity. This cap fluctuates based on wholesale costs and production expenses.
Price Cap Recap
The average dual fuel bill will rise by 13% to £1,862 per year, an increase of £221 or just over £18 per month. Ofgem measures energy in kilowatt hours (kWh). From July, gas is capped at 7.33p per unit and electricity at 26.11p. Electricity prices are up 5%, while gas has surged 24%, largely due to the Middle East conflict. Although Ofgem notes reduced consumption, the average bill is still £1,663, roughly £600 more than five years ago.
Why Is Gas More Expensive?
Wholesale gas prices have jumped 28% in three months, driven by competition and global demand. Gas also generates some electricity, but renewables and nuclear help diversify supply.
When Will Prices Drop?
Even if the Middle East conflict resolves quickly, it will take time to clear shipping backlogs and stabilize markets. Experts hesitate to predict a timeline, but prices are expected to remain high for the rest of the year and could rise further.
Discounts for Direct Debit
Paying by direct debit typically saves around 8%. Most Ofgem estimates already include this discount.
How to Fix a Deal
Fixed-rate tariffs are still available. Look for a deal below the current price cap. Options include fixed unit prices, variable fixes that stay under the cap, or reduced standing charges. Check comparison sites like MoneySavingExpert or MoneySupermarket. Always check exit fees, which can reach £100.
Current Tariff Options
If on a variable tariff, call your supplier to ask about their cheapest plan. Request written confirmation before switching.
Can I Switch with Energy Debt?
Yes, but debts over 28 days old may need repayment. Some suppliers allow transferring debt, and payment plans are available if you cannot pay in full. If disputing the debt, you may move suppliers and pause payment until the complaint is resolved.
Checking Your Bill
Around 4 million smart meters send incorrect readings. Look for an 'E' on your bill, indicating estimated usage. Compare usage over two years; an unexplained increase suggests an issue. Ask your supplier: Why is usage higher? Are readings estimated? Am I on a costly tariff? Are you billing for old energy?
Cutting Your Bill
If you cannot afford your bill, contact your supplier for help. The Energy Saving Trust offers tips. For example, running a pedestal fan for 8 hours costs about 15p.
Making a Complaint
Energy firms must respond in writing. Their final response should detail resolution and compensation. It must also inform you of your right to contact the Energy Ombudsman, a free and impartial service.
