ENERGY bills rose by £94 a year for millions of families on Monday.
The January price cap, which remains in place until March, means a typical household will see their annual charges increase to £1,928.
Households must choose between agreeing a fixed energy tariff or gambling with a variable rate
It marks the first time that bills have risen since October 2022, now leaving 29million households worse off.
Here James Flanders explains if switching can cut costs, and how to get help.
WHY ARE MY BILLS HIGHER THAN THE CAP?
THE price cap by regulator Ofgem sets a ceiling on the amount suppliers can charge for each unit of gas and electricity on the standard variable tariff.
Electricity is currently capped at 28.62p per kWh and gas at 7.42p per kWh for those who pay by direct debit.
Prepayment meter users also have their prices capped at similar rates.
A typical household using 2,700 kWh of electricity and 11,500 kWh of gas will pay roughly £1,928 a year at these rates.
If you use more gas or electricity than this, expect to pay more too.
Ofgem sets a more expensive price cap of £2,058 for those who pay on receipt of bills by cash, cheque, card or bank transfer due to increased administrative costs.
IS IT WORTH FIXING?
HOUSEHOLDS that lock into a fixed energy deal are charged the same gas and electricity rates during the entire term of the contract.
The deals protect customers from bill hikes if Ofgem were to increase the price cap in the future.
Natalie Mathie, energy expert at comparison site Uswitch, says: “The energy market remains volatile, so it can be hard to predict whether opting for a fixed deal or sticking with a standard variable tariff will work out cheaper in the long run.”
But new forecasts by market researchers Cornwall Insight predict that bills will drop by 14 per cent in April and a further five per cent in July.
If you lock into a fixed deal now and prices fall in the future, you will usually have to pay a hefty exit fee to switch back to the standard variable tariff.
For example, Ovo Energy offers a one-year fixed deal that is nine per cent lower than the current price cap, but customers need to sign up for the firm’s boiler cover, costing £15 to £32 a month.
If you decide to switch before the tariff’s end date, you would need to pay a £150 exit fee.
But a fixed energy deal can be worth signing up for if you are after long-term peace of mind.
Emily Seymour, energy editor at consumer champion Which?, says: “As a rule of thumb, we wouldn’t recommend fixing anything higher than the unit rates or standing charges in your current deal, or for longer than a year.”
WHAT ABOUT TRACKER TARIFFS?
CUSTOMERS unwilling to commit to long-term fixed energy deals may want to consider variable tariffs.
Kara Gammell, personal finance expert at comparison site Money Supermarket Group, says: “These will almost always be at or below the price cap.”
For example, E.ON Next’s Pledge variable tariff offers a fixed discount of around three per cent on the price cap rates for 12 months.
It will save the average household around £50 a year but comes with a £50 exit fee if you switch before the year ends.
The deal is available to both new and existing customers.
For a bigger reward but at a higher risk, Octopus Energy offers two variable tariffs which track wholesale gas and electricity costs.
Customers on the Octopus Tracker see their prices change daily, but unit rates have remained consistently lower than the price cap in recent months.
For example, in the last 30 days, people living in Southern England on the Octopus Tracker paid a maximum of 24.9p per kWh for electricity and 5.08p per kWh of gas, which is 3.72p and 2.34p cheaper than the price cap per fuel.
The Agile Octopus tariff works similarly to the Octopus Tracker, the main difference is the former’s prices change every half hour.
Keep in mind that those wishing to switch to any of these tracker tariffs must have a smart meter.
There is help and advice available to struggling families, even from suppliers themselvesGetty
HOW CAN I GET HELP?
ENERGY debt levels rose to a new record of £2.9billion in the last quarter of 2023, Ofgem figures show. If you are struggling to pay your bill, contact your supplier.
They may be able to set up a payment holiday or debt repayment plan to help you better manage your cash.
Most suppliers, including British Gas, E.ON, and Ovo Energy, also offer grants of up to £1,500 to help hard-up families pay off their debts.
Ask your supplier what is on offer and how to apply.
If you cannot agree on a way to pay, get help from Citizens Advice by calling 0808 223 113 or at citizensadvice.org.uk.
For other support, you can use the benefits calculator at turn2us.org.uk to make sure you are not missing out.
And ask your council for local schemes like fuel vouchers and the Household Support Fund.
Pensioners owed over DWP errors
RETIREES are urged to check if they are being underpaid the state pension following errors by the Department for Work and Pensions (DWP).
A simple test can reveal if you are owed money, after thousands of pensioners were left up to £12,000 out of pocket.
Thousands of pensioners have been left out of pocket due to a Department of Work and Pensions errorGetty
Those affected are mostly married, divorced or widowed women, who first claimed the state pension before April 2016.
They should have received increases to the basic pension when their husbands retired.
This is because the old state pension system allowed a woman’s pension entitlement to be based on her husband’s National Insurance (NI) contributions rather than her own. But many women didn’t get this boost due to an IT error.
Some pensioners, both men and women, over 80 have also been identified as being underpaid as they didn’t get an automatic increase they were entitled to.
The latest figures, to October 31 last year, found 82,323 retirees had been short-changed.
The government department has been contacting those affected over the past two years to correct the errors.
But the official exercise was due to be completed by the New Year, meaning anyone who falls into those categories now won’t be contacted.
Experts are urging claimants to take action to ensure they are not still being underpaid.
A quick check can help retirees see if they aren’t receiving the full amount they’re entitled to.
Anyone over 80, and women with a husband over state pension age receiving the full basic state pension, should be receiving £93.60 per week.
Over-80s are automatically entitled to this amount regardless of their NI contributions and marital status, as long as they satisfy a basic residency test in the UK.
Women with a husband over state pension age who claims the full basic state pension of £156.20 per week are also due this amount. If you fall into one of these categories and aren’t getting that much, you could be being underpaid.
Former pensions minister Steve Webb, now a partner at consultancy LCP, said: “Now the DWP has finished checking for errors among married women and the over-80s, anyone still on a low pension should take action.
“Anyone on less needs to contact the Pension Service to see if an error has been made or if they need to put in a claim.”
You can contact the Pension Service on 0800 731 0469 or write to: The Pension Service, Post Handling Site A, Wolverhampton, WV98 1AF. Ask it to check your state pension.
A DWP spokesperson said: “The action we are taking now is correcting historical underpayments made by successive governments.
“Our priority is ensuring pensioners receive the financial support they are entitled to and we have set up a team and devoted significant resources towards completing the exercise.”