MILLIONS can breathe a new sigh of relief as energy bills fall by £238 today.
Ofgem‘s energy price cap has dropped from £1,928 a year to £1,690 a year for a typical household that pays their bill by direct debit.
Over 29million households could see their energy bills drop from today
The exact amount you’ll pay depends on your payment method
The regulator defines this typical household as one that has two to three occupants and uses 2,700 kilowatt hours (kWh) of electricity and 11,500 kWh of gas over a 12-month period.
Over 29million households on the standard variable tariff are affected by the change.
However, the price cap only restricts the amount that suppliers can charge customers per kWh of gas or electricity.
So if you use more energy than the average household – expect to pay more.
The largest households containing four or five occupants should expect to pay £2,365 a year based on a consumption of 17,000kWh of gas and 4,100kWh of electricity.
But the smallest households, containing just one or two occupants, should expect to pay £1,228 a year based on a consumption of 7,500kWh of gas and 1,800kWh of electricity.
However, while one aspect of our energy bills decreases, another component, the standing charge, is increasing.
The unit rates and standing charges for those who pay by prepayment meter or on receipt of their bill are slightly different, and we’ve explained how to work out how much you’ll pay below.
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 has 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 has risen from 29.60p a day to 31.43p a day.
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.
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