Energy consumers in the UK should be aware of price changes set to take effect in April 2023. Several energy suppliers, including British Gas, EDF Energy, and ScottishPower, have announced increases in their standard variable tariffs. These price changes are largely driven by rising wholesale energy costs and the need to invest in renewable energy infrastructure. Consumers on fixed tariffs or prepayment metres may not be affected by the changes, but those on standard variable tariffs could see significant increases in their energy bills. It’s important for consumers to stay informed about these changes and take action to manage their energy costs, such as switching suppliers or reducing energy consumption.
But with the added cost of living crisis, most of us are left wondering why these prices are being raised and how we can cope with it. In light of this, we’ve answered some of the most prominent questions surrounding this topic.
What Is The Energy Price Guarantee?
Put in place by our previous Prime Minister, Liz Truss, the energy price guarantee was set to reduce the extent of price increases for domestic customers. Under the energy price guarantee, the Government sets maximum prices for gas and electricity and compensates energy suppliers for providing these services at below cost prices. This bill was introduced in October 2022, and is set to last two years.
How Much Will Customers Need To Pay?
The energy price guarantee sets maximum unit costs, but the maximum daily standing charges are set by Ofgem’s energy price cap. Originally set at £2500 for 2 years between October 2022 to September 2024, it was later changed to £3000 for the following 12 months (April 2023 to March 2024). This is the annual bill that gas and electricity direct debit customers with usual consumption levels would face, provided these prices stayed the same across a year. How much energy you consume will determine how much you pay, households which use more energy will have to pay more, and those who have a lower energy use will pay less.
Currently, prices are looking to face a 20% increase this year despite generally lower wholesale prices from autumn 2023.
Without the energy price guarantee, consumers would have to pay more under the price cap.
What Government Support Is On Offer?
If you’re worried about the rising energy prices and think you may struggle, there are a number of schemes designed to offer you financial support.
Energy Bills Support Scheme
The Energy Bills Support Scheme (EBSS) will grant all households with a domestic electricity connection in England, Scotland and Wales a £400 discount to help pay the energy bills over winter 2022 to 2023. This money doesn’t need to be paid back and is applied automatically. You don’t need to apply for the discount, and there’s no need to contact your energy supplier.
Winter Fuel Payment
For those born before 26th September 1956, you could get between £250 and £600 to aid you in paying your heating bills. This amount includes a Pensioner Cost of Living Payment of between £150 and £300, you’ll get this during both winter 2022 to 2023 and winter 2023 to 2024.
Warm Home Discount Scheme
Under the Warm Home Discount Scheme you could get £150 off of your electricity prices for winter 2022 to 2022. This money won’t be paid directly to you, as it’s a one off discount on your bill.
Alternatively, you may be able to get the discount on your gas bill instead if your energy suppliers provide you with both gas and electricity.
Will energy prices fall?
Despite the rise in electricity prices, cuts in energy bills are forecast for the second half of 2023. Wholesale prices have declined from their summer 2022 peaks, however there is some delay before this feeds through to consumers.
The latest predictions show the price cap falling below the £3000 energy price guarantee level during the second half of this year. This would mean a cut in household bills.
Falcon Energy
If you’d like to help cut your costs and improve the energy efficiency of your home, then give us a call today on 01403253439 or visit our website.