MILLIONS of households will see their energy bills drop by the end of the year.
New analysis from consulting firm Cornwall Insights has predicted a typical dual-fuel household will pay £1,860 a year from 1 October under Ofgem’s price cap.
Dual fuel tariff holders receive gas and electricity from one supplier.
Households applying these tariffs are currently paying £2,074 a year, but the latest projections will see this drop to £214.
It’s worth noting that Cornwall Insights figures are predictions only, so the price cap is not guaranteed to be £1,860.
In addition, the price cap only places a limit on what companies can charge customers per unit of gas and electricity.
That means you could pay more or less than the predicted £1,860, depending on your usage.
In its latest analysis, Cornwall Insights also predicts energy bills will remain “relatively stable” but above pre-pandemic levels for the foreseeable future.
They also estimate the cap will rise to around £1,960 on January 1, 2024, before falling a little further in March and July 2024.
It comes after the price cap was reduced from £3,280 to £2,074 on 1 July to help millions of households seeing prices skyrocket since 2021.
The price increase was partly due to emerging economies following the coronavirus lockdowns and Russia’s invasion of Ukraine, which sent wholesale prices spike.
However, households have been partially protected after the government introduced an energy price guarantee, capped at £2,500 for the average dual-fuel household.
Craig Lowrey, principal adviser at Cornwall Insight, said: “The news of relatively stable energy bills is sure to leave households with mixed emotions.
“After the spike in bills last winter, it may be a relief to everyone that energy prices are not currently forecast to rise unexpectedly.
“However, there will also be disappointment with prices still much higher than they were seen a few years ago – leaving many hungry for more affordable options.
“The wholesale market remains the main driver of bills, and unfortunately there is no immediate prospect of prices there returning to historical averages.”
What is an energy price limit?
The energy price cap places a limit on the maximum amount suppliers can charge per unit of gas and electricity.
This means you could end up paying more than the headline price cap figure – which is what an average household would pay.
Depending on your usage, you may end up spending more or less.
Ofgem also sets a maximum daily flat fee, which is the fee that households must pay to have their homes connected to the National Grid.
The price cap was introduced in January 2019 and was originally updated every six months but is now revised every three months.
That means that after the new price cap goes into effect on October 1, the next update will be on January 1, 2024.
The energy rate cap only applies to customers using the supplier’s standard rates, so if you’re working on a fixed-term agreement you won’t be affected.
Standard rates mean that your unit prices and flat fees can increase or decrease at any time.
Fixed term trades, on the other hand, will see your unit rate and flat fee remain the same throughout the life of your agreed contract.
A number of fixed-term deals have begun to re-enter the market, with one from So Energy costing £2,047 – £27 less than the current ceiling price.
But while a fixed-term deal may save you now, it may not continue to go down if prices fall as predicted.
What help can you get with your energy bill?
There are many types of support you can get if you’re having trouble paying your bills, even if they’ve fallen.
Some firms offer grants of up to £1,500 to customers who are unable to repay their loans.
British Gas, EDF, Scotland Power, E.ON and Octopus Energy all run plans.
Even if you don’t work with one of these companies, you should contact your provider to see if they run a similar program or can put you on a payment plan.
Meanwhile, you can get help through the Government’s cost of living payment.
There were three people in total, with a £150 payment made.
There is also a £900 payout that has been split into three installments worth £301, £300 and £299.
Millions of people are getting tax-free cash.
The first installment has already been paid and the other two will go into the bank account in the fall and spring of 2024.
You are eligible for payments if you receive any one of the following benefits:
- Income-Based Job Seeker Allowance (JSA)
- Employment Allowance and Income Related Assistance (ESA)
- Income support
- Pension Credit
- Universal Credit
- Child tax credit
- Working tax credit
In addition, the millions of pensioners eligible for the Winter Fuel payment later this year will receive an additional £150-£300.
You should also check to see if you can claim benefits. Not only will you get cash, but it may also make you eligible to pay for living expenses.
The fastest way to see what benefits you can claim is to use one of the three benefits calculators recommended by Gov.uk.
Each one is free to use. They are:
If you are using a prepaid meter, you can get a one time coupon to top up.
Your provider may automatically add this to your meter when you run out of credit, or you may have to contact them to get it.
Check with your energy company how it works for you.
Do you have a money problem that needs sorting? Get in touch by emailing email@example.com.
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