The government recently confirmed that the energy price cap is to be replaced with the Energy Price Guarantee from 1st October 2022. This will ensure that, for the next 2 years, a typical household paying for their energy by direct debit pays an average of £2500 per year. For prepayment customers this rises to £2530 and those paying on receipt of bill will pay £2690 (visit www.gov.uk/government/publications/energy-bills-support for further information).
This is a welcome reduction from the planned energy cap rise announced by Ofgem earlier this month which would have seen a typical household paying over £3500 for energy bills.
However, as with the previous price cap, the new price guarantee is a slightly misleading term. It does not mean a maximum amount a household can be charged for energy usage but rather a limit on how much an energy provider can charge you per unit of energy. The figure they use is the average amount a typical household would pay – however, consumers will still pay for whatever the total amount of energy used by their household amounts to annually.
The new price guarantee is confirmed for both billed and prepayment customers. Anyone paying by monthly direct debit who has recently switched to a fixed rate tariff based on the energy cap pricing will be automatically moved onto the new cheaper rates by their supplier.
Even though this new price guarantee provides some relief for energy consumers, it still represents an increase of 27% to the current energy cap prices that have been in place since April (29% more for those who pay on receipt of bill). This remains a significant increase for households - especially those who's budgets will already be strained by the ongoing cost of living crisis. The Money Saving Expert website has a handy tool that calculates how much your energy bill is likely to increase (and takes into account the £400 energy bill discount payments)
The Stockport Homes Energy Solutions Team are available to provide advice and support to both SHG customers and colleagues who may have concerns about paying for their energy. Please contact [email protected]. More information about support and energy payments can be found on our webpage.