- The energy price cap will rise 13% today to £1,663, adding £18 a month to average household energy bills
- It looks as if it has only risen £22 from the current price cap, but this is only because Ofgem is assuming lower average usage – if it used previous averages, it would be £1,862
- The price cap is forecast to fall very slightly on 1 October, but this will likely be wiped out by higher energy use in the winter
- Ten ways you can beat the energy price rise
Sarah Coles, head of personal finance at AJ Bell, comments:
“Energy bills are rising today, with the arrival of a new, more painful, price cap. We’re paying the price of higher wholesale gas prices after the outbreak of the Iran war, and despite the pull back since the ceasefire, today’s hike was already baked in.
“The fact this is hitting at a warmer time of year means we may not feel the full impact of the rise until the colder weather sets in. However, it’s a great opportunity to consider how you will cope later in the year and whether there are some techniques that could work for you.
Ten ways to beat the energy price hike
- Switch suppliers
“There’s a decent level of competition in the market, so it’s worth shopping around to see if a different company offers a better deal in your area. The switching process may be easier than you think, because nobody needs to come out to you, and there shouldn’t be any interruption in supply.
- Consider a fixed tariff
“Most people are still on the standard tariff, so could consider a fixed deal. Some are charging less than the current price cap, so you could save money immediately.
- Check out discounted tariffs
“You don’t need to fix in order to save, because there are also discounted tariffs. These are variable, so they’ll rise when the price cap does, but they will still save you money.
- Switch to direct debit
“Providers will offer a cheaper tariff for anyone on a direct debit payment plan. Ofgem says this switch alone can save £143 a year on your bills.
- Consider dual fuel
“Most providers offer a discount if you get both your gas and electricity with them, so if you’re with different providers, check if you can make a saving. It’ll make keeping track of your bills easier too.
- Look into smart meter deals
“If you have a smart meter, you can take advantage of tariffs that offer cheaper electricity at weekends or in the evenings. You can make sure you time the washing machine or dishwasher to run when the energy costs less.
- Cut your energy use
“There are a vast range of energy saving approaches, from home improvements to boost insulation and cut drafts, to turning the thermostat or boiler flow temperature down, turning off radiators in rooms you’re not using, only running the washing machine or dishwasher when full or considering energy efficiency when you need new appliances.
- Check out any help on offer from your supplier
“If you have unpaid bills, you can agree an affordable payment plan. If you’re struggling with bills now, you may be able to access grants, agree a pause in payments, or your supplier may offer you a cheaper tariff. They may be the last people you want to contact if you’re finding it hard to pay your bills, but they can help.
- Check for any help from the government
“It’s also worth checking if you qualify for any government support, including the Warm Home Discount and free insulation and boiler grants.
- Let dividends pay your energy bill
“Many companies or funds will pay dividends to their investors as a reward for owning their shares or fund units. Collecting a regular stream of cash is immensely satisfying and it can help to cover essential bills like paying for gas and electricity.
“It’s easy to find investments offering a 5% dividend yield or more, meaning they will pay a £5 cash reward each year for every £100 invested. You would need just over £37,000 in an ISA or pension (if you’re old enough to access your pension pot) to collect enough money in dividends to pay for the £1,862 average energy bill under the new price cap.
“Popular investments yielding 5% or more include NatWest at 5.5% and Legal & General at 7.8%. Among funds, Artemis Corporate Bond yields 5.5% while Invesco High Yield UK yields 7.4%. Just remember that dividends aren’t guaranteed payments and they can be cut or cancelled at any time.”
