Ofgem has announced a £693 increase in the energy price cap, setting it at £1,971 per year. It’s due to come into effect on 1 April 2022. Of course, you don’t have to wait until April to start taking steps to save your hard-earned money. Here is what you need to know and how you can take control of your energy bills.
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How often is the energy price cap reviewed?
Ofgem reviews the maximum rate suppliers can charge customers in February and August each year. However, the new rates come into effect in April and October. There is currently talk of the energy regulator updating the energy price cap every three months to brace for volatility across the global markets.
The February review has already taken place, pushing the energy price cap up by £693 to sit at £1,971. This applies to those on default tariffs paying by direct debit. Prepayment customers will see an increase of £708, setting the new price cap at £2,017.
As if this is not high enough, rumour has it that the August review will further push the energy price cap up by £358 to £2,329 for direct debit customers.
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What can you do to save money?
With such enormous rises presenting significant financial challenges, here are two steps you can take to give you more control over your bills.
1. Switch energy tariffs or suppliers
First, you need to determine how much you’re currently paying to get a benchmark figure. Second, find an Ofgem-accredited price comparison website to help you calculate how much you can actually save by switching. You can access the complete list on Ofgem’s official website.
Keep in mind, though, that the amount you save through switching depends on several factors:
- Your mode of payment
- Where you live
- How much energy you use
- Your particular tariff
- Whether you are on a dual fuel energy deal or not
A study carried out last year by Energy Scanner revealed that a typical household could save around £180 for payments made by monthly direct debit. However, by paying quarterly by cheque or debit card, the family could save an additional £79! This does not mean you’ll get to save that exact amount – it could be more or less. Use energy price comparison websites to get an accurate figure.
You may also have to regularly review and compare different deals to ensure you’re still on the cheapest one.
2. Use energy-saving electrical appliances and fixtures and switch them off when not in use
When choosing appliances, check their energy performance rating. The appliance will have a rating represented by a letter from A to G. Appliances with an A rating are the most energy-efficient, while those with a G rating are least efficient.
Note as well that size matters. A larger appliance rated A will consume more electricity than a smaller appliance with the same rating. It also helps to know which appliances consume the most energy in your home so that you can use them less and ensure they are off when not in use. They might be older appliances that could be replaced with more energy-efficient models.
