Major change to energy bills TODAY – how to avoid paying more
MILLIONS of households will pay on average £122 less a year for their energy bills from today following a major change to the price cap.
In May, the regulator Ofgem confirmed the typical gas and electricity bill will be capped at £1,568 a year from July 1, compared to the previous rate of £1,690 a year.
This is the lowest level in two years.
From 1 July to 30 September 2024, average energy bills will have fallen by seven per cent compared to the previous energy price cap.
The energy price cap limits the price you pay for energy, although your bill will vary depending on how much energy you use.
Only standards and variable tariffs are affected by the price cap, impacting 28 million households, according to Ofgem.
Unit rates will fall while standing charges – a fixed daily amount – will stay the same.
It means those with higher usage will benefit more from falling prices.
The energy regulator said the price a supplier can charge for gas will fall from 6.04p per kWh today, to 5.48p from July 1.
The price of electricity will fall from 24.5p per kWh to 22.36p, Ofgem said.
Standing charges, which cover things like maintaining the network and operational costs, will drop to 31.41p from 31.43p a day for gas and from 60.1p to 60.12p for electricity.
Overall energy bill standing charges will remain at £334.
However, Mike Thornton, chief executive of Energy Saving Trust said: “No one should take this lower price cap as a sign of stability. Forecasts show that energy prices are set to rise again this autumn and will be staying high overall for the next decade.
“After the election the incoming UK government must prioritise policies that support people to use less energy and install cost effective energy efficiency improvements in their homes.”
You can make sure you aren’t paying more than you need to by taking a meter reading.
Here’s what you should do:
How do I calculate my energy bill?
BELOW we reveal how you can calculate your own energy bill.
To calculate how much you pay for your energy bill, you must find out your unit rate for gas and electricity and the standing charge for each fuel type.
The unit rate will usually be shown on your bill in p/kWh.The standing charge is a daily charge that is paid 365 days of the year – irrespective of whether or not you use any gas or electricity.
You will then need to note down your own annual energy usage from a previous bill.
Once you have these details, you can work out your gas and electricity costs separately.
Multiply your usage in kWh by the unit rate cost in p/kWh for the corresponding fuel type – this will give you your usage costs.
You’ll then need to multiply each standing charge by 365 and add this figure to the totals for your usage – this will then give you your annual costs.
Divide this figure by 12, and you’ll be able to determine how much you should expect to pay each month from April 1.
Take a meter reading
An updated meter reading will mean your supplier has a better idea of your usage.
It means it’ll then be able to charge you fairly.
Energy suppliers usually require you to take regular meter readings from your gas and electricity meter to work out how much they should charge you.
Customers that don’t do this have their bills calculated by an estimated usage and will likely pay more.
Therefore, it is worth working out how to take a meter reading to ensure you’re not overcharged.
If you don’t have a smart meter it’s wise to get these numbers in ASAP.
Those with smart meters don’t need to send a manual reading because they’re sent to suppliers automatically.
We’ve explained how to take and submit a meter reading.
What is the energy price cap?
The price cap on energy bills was introduced in January 2019 as a way to prevent households being ripped off by their energy suppliers.
But in October 2022 as energy prices surged, the government brought in the energy price guarantee which replaced the cap temporarily to keep household bills down.
Initially, this limited the typical domestic energy bill to £2,500, but this has now fallen to £1,568 a year.
It affects around 29 million customers on default or variable tariffs, according to the regulator Ofgem.
The cap is calculated based on the wholesale price of gas and electricity.
It also includes allowances for tax, charges paid to the energy networks, green levies and social payments.