ENERGY firms are allowed to hike everyone’s bills by £28 to help cover other customers’ debts, says Ofgem.
The regulator has granted the temporary levy to cover losses after Brits have struggled to keep up with payments and fallen into huge arrears during the cost-of-living crisis.
GettyAround £2.33 will be added to your bills per month to cover peoples arrears[/caption]
After announcing that bills would dramatically fall by £238-a-year for many when the new price cap comes into force on April 1, Ofgem has since confirmed the upcoming charge.
It’s understood arrears have reached more than £3billion as the country now battles its way through a recession.
While most households will see their bills drop £20 with the new cap fall, energy companies are still owed hefty amounts which needs resolving, say the regulator.
Ofgem said they will now charge an extra £28-a-year to every customer to ensure debts are paid – as an estimated five million find themselves in arrears on their account.
A spokesperson for Ofgem said: “We are also allowing a one-off extra payment of £28 per year (£2.33 per month) to make sure suppliers have sufficient funds to support customers who are struggling.
“This will be added to bills of people who pay for their energy by Direct Debit or standing credit.
“The temporary payment is partly offset by the end of an allowance worth £11 per year that covered debt costs related to the COVID pandemic.”
NEW PRICE CAP
On April 1, cap will fall from the current rate of £1,928 to £1,690.
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.
The price of electricity will fall from 28.62p per kWh to 24.50p, Ofgem said.
The standing charge, a fixed daily amount you have to pay for energy, no matter how much energy you use, is going up though.
For gas, standing charges are going up to 31.43p a day, from 29.6p currently – based on the average across England, Scotland and Wales.
The daily standing charge for electricity will rise to 60.1p a day, up from 53.35p.
This means that for direct debit customers, your total energy bill standing charges will rise to £334 a year from £303 now.
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 bill, 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.
It’s important to note though that the price cap 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.
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.