ENERGY bills are set to fall by £238 for millions of households this spring.
The energy regulator Ofgem has confirmed the new price cap, which comes into effect on April 1.
Analysts had expected the price cap to fall by £298 a year
The cap will fall from the current rate of £1,928 to £1,690, the fresh figures show
It means the average household will see their annual bill drop by £238.
The energy regulator said it will cut the price that a supplier can charge for gas from 7.42p per kWh today to 6.04p from April 1.
The price of electricity will fall from 28.62p per kWh to 24.50p, Ofgem said.
It’s important to note though that this is not a cap on the overall amount people will pay for their energy.
Instead, it caps the amount that they pay per kilowatt hour, or unit, of gas and electricity.
The figure is calculated based on what Ofgem thinks an average household will use.
Experts at Cornwall Insight previously predicted a typical household would see their bills drop by £293 a year.
This is calculated assuming that a typical household uses 2,900 kWh of electricity and 12,000 kWh of gas across a 12-month period.
Those who use less will pay less, and those who use more will pay more.
Be aware that the exact unit rates and standing charges you pay will vary slightly based on your supplier, where you live and how you pay for your gas and electricity costs.
The price cap is adjusted every three months to reflect changes in underlying costs, as well as inflation, and only impacts UK households on default or variable tariffs.
This still accounts for roughly 29million customers, according to Ofgem.
The fall in prices in the spring comes as a result of a mild winter and high levels of gas storage in Europe.
But Cornwall Insight is forecasting that the cap will continue to decline on July 1, with a small rise in October.
However, experts say that customers will now be looking to suppliers to offer better energy tariff choices.
How do I calculate my bill?
Below we reveal how you can calculate your own energy bill.
To calculate how much you pay on your current fix, you will need to find out both 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 work out how much you should expect to pay each month from April 1.
We’ve listed eight steps to take now to save on your energy bills.
1. Take a meter reading
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 who don’t do this are billed on estimated usage and will likely pay more.
So if you don’t have a smart meter, ensure that you regularly submit meter readings to your supplier.
Those with smart meters don’t need to send a manual reading because they’re sent to suppliers automatically.
Submitting a meter reading just before the rates change will ensure you’re charged the correct amount for the energy you’ve used.
We’ve previously explained how to take a reading from different types of electricity and gas meters.
2. Check your direct debit
If you pay your energy bill by direct debit, this monthly amount should be “fair and reasonable”.
If you don’t think it is, you should complain directly to your supplier in the first instance.
If you’re not happy with the outcome you can take it to the independent Energy Ombudsman to dispute, but there are a few steps before you get to that stage.
Your supplier must clearly explain why it’s chosen that amount for your direct debit.
If you’ve got credit on your account, you have every right to get it back – although some experts recommend keeping it there through the summer, so your bills don’t go up in the winter when you use more energy.
Your supplier must refund you or explain exactly why not otherwise and the regulator, Ofgem, can fine suppliers if they don’t.
If you are disputing a bill, taking a meter reading is a must.
If it’s lower than your estimate, you can ask your provider to lower your monthly direct debit to a more suitable amount.
But beware so you don’t end up in debt later on with a bigger catch-up bill at the end of the year from underpayments racking up.
If you don’t have success in negotiating a lower payment then you can put in a complaint to the Energy Ombudsman.
3. Check for any new energy deals
There are currently fixed deals on offer that are priced close to or slightly higher than standard variable tariffs, but they offer peace of mind that your rates will not change for 12 months.
But you could end up being stuck paying more if prices fall in future so it’s important to assess the real value of these offers.
Run a comparison at Uswitch.com to see personalised options based on your usage and region.
4. Check if you qualify for support
Households should check whether they qualify for energy support schemes or grants.
The government runs the Warm Home Discount scheme, which provides £150 in energy credit to help with bills during the winter and has recently introduced the Great British Insulation Scheme.
Councils also offer the Household Support Fund.
Many suppliers have customer support funds offering home insulation, energy-efficient white goods and cash grants.
Here’s a list of schemes open right now:
British Gas Energy Trust Individuals and Family Fund
British Gas Energy Trust
EDF Customer Support Fund
E.ON and E.ON Next Grants
Octopus Energy Assist Fund
OVO Energy
Scottish Power Hardship Fund
5. Change your thermostat and boiler settings.
Check the temperature on your thermostat and adjust it if required.
The World Health Organisation suggests most healthy people should heat their homes to 18 degrees Celsius.
Reducing the flow rate on combination boilers to around 60 degrees Celsius can cut heating bills, and you won’t notice the difference.
It should save you around £112 per year, depending on the type of boiler you have.
6. Change your radiator settings.
Get ahead of the first cold spell by checking if your radiators are up to scratch.
Bleeding your radiators will prevent cold spots, and you may want to consider turning radiator valves down – or off – in the rooms you use less often.
The average household can also save up to £75 every year if they have thermostatic radiator valves fitted on all their radiators, according to British Gas.
Valves can be picked up for less than £10 and they’re easy to replace yourself if some of yours are not working.
We’ve previously explained what the numbers on these valves mean and how to adjust them for optimum efficiency.
It’s also important to keep your radiators free from obstructions, like furniture, for maximum heat.
7. Change the way you use your appliances.
Tracking your usage may help you see how changing some habits can make a difference in your home.
Whether that’s setting your wash cycle at a lower temperature or eco mode, ditching the tumble dryer, or running the dishwasher only with a full load, small changes may have a big impact on your next meter reading.
For example, Which? says that washing clothes at 30°C is generally fine for clothes that aren’t dirty – this could cut energy use by 38% on average compared to a 40°C wash.
And a 20°C wash will use 62% less energy.
Here are some ways to cut dishwasher costs too.
8. Check for draughts
Draught-proofing is a quick and cost-effective way to prevent heat escaping, which could save you around £50 a year.
Fitting door seals between doors and frames, attaching brushes under draughty external doors and using chimney balloons all keep the heat in.
Thermal and lined curtains also prevent heat loss.
Check out seven ways you can instantly draught-proof your house this winter.
Meanwhile, we reveal exactly what the energy price cap is.
Plus, households will see their council tax soar in weeks – but there are several ways you can get your bills discounted or wiped.
Do you have a money problem that needs sorting? Get in touch by emailing [email protected].
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