Some things are a shock even when you expecting them. The announcement earlier this month that the cost of heating our homes and cooking our meals would rise by 54 per cent from April was a big one. The headline figure that it would add nearly £700 to our annual fuel bills (an extra £58 a month) was horrific.
Since 2019 the price that energy companies can charge customers in England, Scotland and Wales has been subject to a cap. It was introduced to stop them profiteering when people came off fixed rates and the supplier dumped them on very expensive tariffs. It is increased twice a year in April and October, with the new cap announced two months earlier.
Since the last fix, the price of gas at one point quadrupled on world markets, and companies have been selling energy to us at a loss. So the
April cap reflects some of that rise. In Northern Ireland, where there is no cap, prices have already been rising strongly.
Some will face even bigger bill increases. People coming to the end of fixed-rate deals that they took out a year or two ago could see their prices double or more. There are no new fixes worth switching to now, so we are all stuck with paying the capped price.
Additionally, we use gas to generate about a third of our electricity, so that has soared in price, too. People who just use electricity – about one home in seven has no piped gas – will see slightly smaller rises. But they come with a sting. The price of the units of electricity will rise by “only” 36 per cent, but the standing charge that you pay just to be connected will rise by nearly £75 a year – an 82 per cent increase to £165 on average. You cannot avoid the standing charge by putting on an extra jumper or turning the thermostat down.
If you’re already struggling to pay your bill, ask your energy company what help it might offer. And in next week’s column I’ll look at the
Chancellor’s plan to “take the sting” out of price rises.
Paul Lewis presents Money Box on Radio 4.