MILLIONS of households will see their energy bills fall by £238 a year in the Spring.
The energy regulator Ofgem has confirmed the new price cap which affects the 29million households on the standard variable tariff.
Typical bills will fall for millions of households on April 1
The cap will rise from £1,928 to £1,690 on April 1.
It means a typical household will see their annual duel-fule bill drop by £238.
It’s important to note that the price cap is not a cap on the overall amount people will pay for their energy.
Instead, it caps the amount that customers pay per kilowatt hour, or unit, of gas and electricity.
The figure is calculated based on what Ofgem thinks an average household will use.
This is calculated assuming that a typical household uses 2,700 kWh of electricity and 11,500 kWh of gas across a 12-month period.
Those who use less will pay less, and those who use more will pay more.
Here’s what April’s price cap will mean for your money.
What does it mean for those who pay by direct debit?
Direct debit is one of the most popular choices to pay your energy bills.
It’s a hassle-free method that automates payments from your bank account, ensuring you never miss a due date.
You can opt for monthly or quarterly payments, depending on what works best.
The energy regulator will cut the price that a supplier can charge for those on direct debit for gas from 7.42p per kWh today to 6.04p from April 1.
However, the average standing charge for gas will rise from 29.60p to 31.43p.
The standing charge covers the cost of having your property connected to the network, carrying out meter readings and maintenance.
This is paid every single day, 365 days a year.
Ofgem said the price of electricity will fall from 28.62p per kWh to 24.50p.
However, the average standing charge for electricity will also rise from 53.35p to 60.10p.
This means a typical household on direct debit will now be expected to pay £1,690 a year.
How do I calculate my energy bill?
BELOW we reveal how you can calculate your own energy bill.
To calculate how much you pay for your energy bill, you must find out 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 determine how much you should expect to pay each month from April 1.
What does it mean for those who pay by prepayment meter?
Prepayment meters are a pay-as-you-go solution for energy usage. You can top up your meter at various locations or online.
This used to be one of the most expensive payment options. However, Ofgem has brought prices more in line with those who pay by direct debit.
The energy regulator will cut the price a supplier can charge for those on gas prepayment meter from 7.24p per kWh today to 5.28p from April 1.
The average standing charge for gas will fall from 33.32p to 31.43p.
Ofgem said the price of electricity will fall from 28.17p per kWh to 23.72p.
However, the average standing charge for electricity will rise from 55.53p to 60.10p.
This means a typical household on a prepayment meter will now be expected to pay £1,644 a year.
What does it mean for those who pay on receipt of their bill?
Those preferring a more traditional approach can pay their energy bill using various methods, including cash, cheques, or cards.
However, this is the most expensive payment method.
The energy regulator will cut the price a supplier can charge for those paying on receipt of bills for gas from 7.81p per kWh today to 6.36p from April 1.
However, the average standing charge for gas will rise from 34.97p to 35.21p.
Ofgem said the price of electricity will fall from 30.12p per kWh to 25.79p.
However, the average standing charge for electricity will also rise from 60.01p to 65.88p.
This means a typical household paying on receipt of their bill will now be expected to pay £1,797 a year.
How can I get help with my bills?
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 theWinter 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
If you’re worried about bills, these freebies could help you to keep costs down.