Energy prices have now risen by nearly 4%, with forecasts of a much bigger jump to come in January. Regulator Ofgem’s price cap affects about 20 million households in England, Scotland and Wales and sets a maximum price for each unit of gas and electricity. Forecasters have suggested a 16% increase is possible in January, due to high wholesale prices paid by suppliers as a result of the conflict in the Middle East. While that’s beyond consumers’ control, charities say the government should offer more support – beyond a VAT cut on electricity bills which takes effect on Thursday – and households should reset for winter again.
That includes reading the meter now, and taking other steps to keep a check on rising bills. The energy regulator, Ofgem, is advising people to consider fixing – so that the price you are charged per unit of gas or electricity does not change every three months, although the total bill will still vary depending on how much energy you use. The trouble is that it is very difficult to work out whether a fixed deal is a good deal at the moment. Should energy prices rise sharply, then those who have fixed already have the certainty of what they will pay for each unit of energy.
That price may well be lower than the forecast price in January. However, if events in the Gulf region settle down, and a peace deal in the Iran war leads to lower international gas prices, then a longer-term fix might not seem such good value compared with the price cap. So consumer group Which? also recommends keeping an eye on any exit fees when picking a fixed deal. If variable prices fall below your fixed rate and you want to get out of it before the end of your agreement period, you may have to pay a hefty sum.
Before you fix, consumer website MoneySavingExpert advises you look at all the deals available, not just what your own supplier is offering. Ofgem says about five million people still pay their bill when it arrives every three months. For some that’s because they do not want their supplier to estimate their usage in case they are overcharged. Taking regular meter readings, or having a smart meter, while paying by monthly direct debit solves that problem.
Moreover, paying by direct debit costs less per unit than by so-called standard credit. You will usually – although not always – need to switch to direct debit if you want to take advantage of the fixed deals on offer. Customers on prepayment schemes – usually people on low incomes struggling to pay bills – used to pay a higher rate than others, but now they pay slightly less than the capped direct debit variable rate. There are also a range of pricing schemes offering cheaper off-peak electricity, for example if you are charging an electric car overnight.
There are a range of ways people on low incomes can access support. This winter anyone on means-tested benefits will get £150 off their electricity bill. Your supplier will apply the discount automatically unless you are in Scotland, where you will need to contact your energy company to ask for the help. Some people will also be eligible for a Cold Weather Payment, external and most pensioners will receive the winter fuel payment, after political pressure forced the government to U-turn on its plan to restrict it to the poorest pensioners.
Beyond that, most energy suppliers offer hardship grants for people struggling to pay their bills and the government’s Fuel Direct Scheme, external can help you repay energy debt. You can get more advice from Ofgem, external, Citizens Advice, external, or your own energy supplier. Trade body Energy UK has a list of support schemes, external. People on low incomes may also be eligible for grants to help with insulating their homes, and there are local schemes offering grants for solar panels, heat pumps and the like.
But if you are hunting around for grants, watch out for scams pretending to be official money-off schemes. Once the temperature outside starts to fall again, it is important to stay warm, especially for the very young, old, and those with health conditions or reduced mobility. But there are plenty of ways you can keep bills lower without letting the temperature in your home fall below the recommended 18C minimum. You may already have hung thicker curtains and blocked the draughts over the last couple of winters, but do not forget to switch off radiators in rooms you are not using and wrap up.
MoneySavingExpert advises to “heat the human not the home”. Turning down the flow rate on a combi boiler can save you money as often the water is being heated higher than it needs to be. Batch cooking and using an air fryer or microwave rather than heating up the oven for a small item can save energy. Take shorter showers and wash clothes at 30C rather than 40C.
Dry clothes outdoors if you can, rather than using a tumble dryer, or hang clothes indoors but ventilate well or use a dehumidifier to avoid damp. If you are thinking about moving home, or undertaking renovations, it is worth thinking through how to reduce bills. When it comes to white goods, look for energy-efficient appliances.
