The Energy Price Cap increased by 5% as of 1 January 2024.
For those living in private accommodation, energy bills are becoming an added stress to household budgets as the colder months drag on. 🥶
While the average annual energy bill fell by 7% on 1 October 2023, for those on standard price-capped energy tariffs, Ofgem has recently announced that the price of energy for a typical household using gas and electricity and paying by Direct Debit will go up by £94 a year.
Of course, what you pay depends on your usage and where you live. For most students, the 5% increase likely won’t be as much.
For example, if your monthly energy bills are £100 for your household, an increase of 5% means you’ll pay about £5 extra/month.
Annual equivalent cost
Use this MoneySavingExpert calculator to estimate how much more you'll pay under the Energy Price Cap from January.
So, what can you do?
First, figure out whether you're on a 'fixed' energy deal or a 'price-capped energy tariff.' Ask your supplier which one you’re on, or log into your account to find out.
If you're not on a 'fixed' energy deal, chances are you're on a 'price-capped tariff,' where the Energy Price Cap dictates the cost of your energy bills.
Then, you need to figure out whether you’re better off either:
Staying on the Energy Price Cap: If you choose this route, the amount you pay for energy over the next 12 months will be influenced by how the Price Cap rises or falls. Price-capped tariffs are variable and will change again in April and every three months after that.
Fixing your energy: Opting for a 'fixed' energy deal means you'll pay close to the previous price of energy, which was lower than it is now. You'll pay at that rate for the duration of the contract (usually a 12-month 'fix'), without the Energy Price Cap affecting your costs during that period.
But it's a double-edged sword: Choosing a 'fixed' energy deal eliminates the variability of a fluctuating Energy Price Cap, but there's still a risk of overpaying if the Price Cap falls to a lower level in April.
So, while experts are trying to make predictions from April onward, nothing is certain.
For a more detailed breakdown of the Energy Price Cap, along with tools to help you make an informed decision on whether to stay on the Energy Price Cap or switch to a 'fixed energy deal,' check out Martin Lewis’ MoneySavingExpert article.
Struggling to pay bills? Here are a few ways to help
The cost of living is high right now overall. Having to think about spending even more on bills can be incredibly stressful. If you’re struggling to pay your energy bills this winter, here are a few things that may help:
Make sure you’re paying the correct amount. Use an energy calculator to determine you’re paying the right amount on your bills.
Try to find ways to keep warm without turning up the heat. Check out this TikTok for some tips!
You might also be eligible for financial support. Visit Citizens Advice to find out more.
And as always, the recipe for surviving and thriving through economic tough times is the same and comes down to taking care of the foundations:
Be mindful of what you’re spending 💸
Look at how much money you have coming in vs how much is going out using a budgeting tool or app
Try to build an emergency fund – even a small amount will help you feel more in control. 🧘♀️