What can you do about rising energy bills?
Energy bills may have fallen in April, but with steeper bills forecast in July, it’s worth reviewing your energy tariff now if you don’t want a price shock in a few months’ time.
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Most of us will have heaved a sigh of relief that the energy price cap fell by 7% this month, particularly as so many of our other bills, including council tax and water, have jumped sharply. However, this relief is likely to be short-lived, as the conflict in the Middle East has pushed up oil prices significantly. This in turn increases the cost of generating electricity from gas and drives up transportation and production costs across the economy, pushing inflation higher overall.
As a result, analysts Cornwall Insight expect the price cap to increase by 14% in July, which would take annual bills for a typical household from £1,641 today to around £1,973 a year in July, an increase of £332.
It’s worth bearing in mind that the energy price cap isn’t a fixed cap on the most you can pay: it’s a cap on prices for the average user. If you live in a bigger property, for example, and use more energy, or live in a large or draughty house, your energy costs are likely to be higher than the price cap.
Conversely, if you live in a smaller property and your energy usage is relatively low, your annual bills may be much lower than the price cap.
Review your tariff
Dig out your latest energy statement and find out which tariff you’re currently on. Most people are on their supplier’s default variable tariff, which is the price plan customers are put on when their fixed-term contract ends, or if they have never switched suppliers. Under these tariffs, you are protected by the price cap, but given this is expected to rise in the future, your bills will likely go up too.
It’s therefore worth seeing whether there might be any alternative tariffs which you might be able to move to which could save you money and protect you from rising prices. The exact tariffs you’ll be offered will depend on where you live, how you pay your bills, but if you can find a fixed tariff that’s lower than the current price cap, you may want to consider moving to it.
That said, there’s always a chance that fixed tariffs could fall further if oil prices drop back more in coming weeks, meaning you might miss out on even cheaper prices. However, if you want peace of mind that you won’t be hit by a hike in costs later this year, you may decide you’re more comfortable signing up for one sooner rather than later.
Alastair Douglas chief executive at TotallyMoney said, “Most switches take place within five working days, all your plugs and pipes stay the same, and nobody needs to visit your home to change things over. Before you make the move, check whether you’re tied into an existing deal. Early exit fees can cost around £50 per fuel – so £100 in total. But if you’re in the last 49 days of your contract, you won’t be charged. And if you’ve not switched in a year, there’s a good chance you're completely free to move."
Save energy at home
You may be able to reduce your energy costs simply by making a few simple changes at home, for example, by unplugging so-called ‘vampire’ devices.
Aseem Munshi, Founder of Updraft, “Vampire devices refer to the energy that your appliance or electrical devices use when they’re plugged in, even when turned off or not in active use. This phantom power can silently bump up the cost of your energy bill before you even realise it.”
“To combat this, unplug unused appliances, including chargers, TVs, and kitchen appliances when not in use, helping to save up to £147 a year on your electricity bill.”
Reducing the length of time you spend in the shower can also knock a surprising amount off energy bills.
“A 10-minute shower costs the average household around 73p for an electric shower and 40p for a gas shower,” said Munshi. “For one person alone, this amounts to £266.45 each year for a daily shower powered by electricity.
“To lower this cost, set a timer to cut down showering time and, as a result, household costs. Over the span of a year, reducing a 10-minute shower to a 3-minute shower can save up to £186.52 or 36% on your typical bill.”
With energy prices still uncertain, taking a few simple steps now could make a noticeable difference to your bills. Whether that’s switching tariffs, cutting back on everyday usage, or both, a bit of time spent reviewing your energy costs today could help you avoid a much bigger shock this summer.
Read more on how to cut utility bills without spending any money
*This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.
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