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What is the energy price cap and what does it mean for you?
In simple terms, the energy price cap is the maximum unit price of energy for the average household.
It means, this is the maximum amount that can be charged for a single unit of energy.
However, it does not mean that this is the maximum that a household would have to pay, this can change. If you use more energy, then the price will go up. It simply means that fuel costs are rising, and bills will rise with it.
In October, the energy cap is set to increase, which will impact millions of households across the UK.
In May, energy regulator Ofgem said the typical household should expect to see an £800 increase, to £2,800 a year.
This sadly means that over 8 million households could end up in fuel poverty, which is an alarming statisitc.
How will this impact the average household?
Another analyst, management consultancy BFY, has predicted a typical energy bill could hit £3,850 a year by January.
The average bill was £1,400 a year in October 2021. The last price cap increase, in April 2022, saw that rise to £2,000.
This increase will mean that each unit of energy that is consumed by households, will increase.
Which in turn, means that bills are set to increase. Which is difficult, especially since the country is in the grips of a cost of living crisis.
All households in England, Wales and Scotland will be given a one-off £400 discount on their fuel bills in October. The government says customers in Northern Ireland will also get the money.
This will be applied in monthly instalments over six months, with a reduction of £66 in October and November, and £67 a month from December to March 2023.
Why is the price cap increasing?
There are a multitude of factors that impact the price cap.
Most notably, the war in Ukraine is causing gas from Russia to be restricted. Due to this, gas prices have increased at an alarming 450%. This has an impact on everybody.
The increasing use in energy post Covid is also a factor, more energy is being used, so the more it will cost. Offices, shops, and units that were empty for two years are now being used again.
As demand has gone up, prices have gone up.
Fuel costs are one of the main reasons UK inflation – the rate at which prices increase – is over 9%. This is higher than at any point in the past 40 years.
Many people are expected to face “fuel poverty” – when a household has to spend a high proportion of its income on energy bills.
It is anticipated that these increases will last well into 2023.
The average household energy bill is expected to hit £3,359 per year from October and stay at this rate — or higher — until the end of 2023, new analysis suggests.
This means energy bills will remain at more than two-and-a-half times their pre-crisis levels for the next 17 months.
What help is available?
Naturally, the increase is leading to escalating fears. People are concerned about surviving the winter, and shops are concerned they will no longer be able to keep the lights on.
There is help out there, and we wanted to highlight that.
We want people to know that you do not have to suffer, or struggle alone.
If you, or anyone you know is suffering mentally due to this, please also seek help. There is help there for you, if you need it. Please do not suffer alone.
In terms of finanical help there are also options.
The best place to start will be your local authority, the welfare team will be best placed to tell you what kind of help is available to you in your area.
Your local citizens advice bureau is also a good place to start, they are trained to know how to help, and where to go for help.
How can we help you?
We specialise in energy grants, and helping you to find solutions to mounting energy bills.
We can help you through this time, and help you reduce your household costs.
The first step is to send an application form.
One of our dedicated advisors will then get in touch with you, to work out what the best solution is for you going forward.
We want our customers to know, that we are here to help, in any way that we can.
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